KARAN D AGGARWAL,MUMBAI vs. ADDL CIT RG 26(2), MUMBAI

This appeal has been filed by the assessee against order dated 26/03/2014 passed by Ld. CIT (Appeals)- 28, Mumbai for the assessment year 2008-2009, whereby the Ld. CIT(A) has dismissed the appeal filed by the assessee against penalty order passed u/s 271D of the Income Tax Act, 1961 (for short ‘the Act’).

Brief facts of the case are that during the assessment proceedings it was noticed that the assessee has taken cash loan of Rs. 1,00,000/- from one Shri Samsher Singh. Since, the loan was taken in cash in violation of provisions of section 269SS of the Act, show cause notice was issued by the AO. In response thereof the authorized representative 2 Assessment Year: 2008-2009 submitted that the assessee was not aware of the provisions u/s 269SS. The AO levied penalty of Rs. 1,00,000/- u/s 271D holding that the ignorance of law is no excuse. The assessee challenged the said order before the CIT (A). The Ld. CIT (A) dismissed the appeal ex-parte on the ground that the assessee or his authorized representative failed to pursue the appeal despite availing a reasonable opportunity of being heard by seeking adjournments on frivolous grounds.

Aggrieved by the order of Ld. CIT (Appeals), the assesse preferred this appeal before us on the following effective grounds:-

The assessee has also filed an additional ground without prejudice to the grounds of appeal initially raised. The additional ground filed by the assessee reads as under:

After hearing both the parties, we allowed the additional ground filed by the assessee being legal in nature and permitted the Ld. Counsel for the assessee to argue the case on all the grounds including the additional ground filed before us.

At the outset, the Ld. Counsel for the assessee submitted that the penalty order passed by the AO is bad in law as the same has been passed in contravention of the provisions of section 275 of the Act. Since the impugned order is time barred, the same is liable to be quashed.

On the other hand, the Ld. Departmental Representative relied on the concurrent findings of the authorities below.

We notice that the Ld. CIT (A) has passed the impugned order ex- parte against the assessee after being satisfied that the assessee is no more interested in pursuing the appeal. Admittedly, this additional ground was not raised before the Ld. CIT(A). Under these circumstances, we are of the considered view that the legal ground raised by the assessee is required to be examined by the Ld. CIT(A) afresh in the interest of justice. Since, the assessee has failed to appear before the Ld. CIT(A) despite sufficient opportunities of being heard provided to him, we impose a penalty of Rs. 1,000/- on the assessee and set aside the impugned order passed by the Ld. CIT(A) and send the appeal back to the Ld. CIT(A) to pass the order afresh in the light of the legal ground raised by the assessee before the Tribunal, after hearing the assessee. The assessee is directed to deposit the cost in the account of the department within two months from the date of this order.