MUTHUSAMY VENKATACHALAM,ERODE vs. ITO, WARD-2(5),, ERODE

Brief facts of the case are as under: The assessee is an individual and has not filed the return of Income for AY 2013-14. In response to notice u/s 148 of the Income Tax Act, 1961 (‘ACT’ in short) dated 29.03.2018, the assessee filed return of income on 26.02.2019 declaring total income of Rs.1,60,140/-. The assessment was completed u/s 143(3) r.w.s 147 on 11.10.2019 by assessing total income at Rs.7,06,206/- and a penalty proceeding was also initiated. Subsequently, notice u/s 274 r.w.s 271(1)(c) was issued on 11.10.2019 but assessee did not comply the said notice. Further, notices dated 09.06.2021 and 02.08.2021 issued to the assessee were not complied hence penalty u/s 271(1)(c) of Rs.1,68,766/- being 100% of tax sought to be evaded was levied on the assessee.

Aggrieved, the assessee filed appeal before the ld.CIT(A) who upheld the order of ld.AO on merits and rejected the legal arguments. Now, the assessee is in further appeal before us.

The assessee’s Counsel once again reiterated the arguments which were take before the ld.CIT(A). Per contra, the ld.DR-JCIT relied upon the orders of the lower authorities and prayed for the dismissal of the appeals filed by the assessee.

We have heard the rival submissions and perused the records of the appeal file and orders of the lower authorities. We find that during penalty proceedings before AO, there was Covid-19 pandemic and there is every possibility that assessee might not was able to substantiate his case effectively. As noted by the ld.CIT(A), even the assessee was not able to explain the source of cash deposits before the appellate penalty proceedings. Accordingly, in the interest of justice the impugned order is set aside and the penalty appeal is restored back to the file of Ld. A.O. for de novo adjudication after affording proper opportunity of hearing to the assessee. The assessee is directed to file cogent evidence, if any, to substantiate his case forthwith without any fail, failing which Ld. A.O. shall be at liberty to proceed with the de novo penalty on merits as well as on legal issues, if any raised. The assessee is given liberty to take all such legal grounds permissible under the Income Tax Act, 1961.

In the result, appeal filed by the assessee is allowed for statistical purpose. Order pronounced in the open court on 29th August, 2024 at Chennai.