VARAD FASHIIONS P. LTD,MUMBAI vs. ADDL CIT (TDS) RG 3, MUMBAI

Per Jason P. Boaz, A.M.

These appeals by the assessee are directed against the orders of the CIT(A)-14, Mumbai dated 08.10.2014 upholding the levy of penalty of `1,20,300/- and `83,530/- under section 272A(2)(k) of the Income Tax Act, 1961 (in short, 'the Act') by the Assessing Officer (AO) for assessment years 2009-10 and 2010-11 respectively. These appeals having common issues, were heard together and being disposed off by way of this combined order. 2. In these appeals, the assessee has raised similar grounds challenging the levy of the aforesaid penalties under section 272A(2)(k) of the Act for both assessment years 2009-10 and 2010-11 and therefore the grounds raised for A.Y. 2009-10 only are extracted hereunder: - “1. On the facts and circumstances of the case and in law, the Commissioner of Income tax (Appeals) erred in not giving the Appellant opportunity of being heard before confirming penalty of Rs.1,20,300 under section 272A(2)(k) of the Income tax Act, 1961 (“the Act”).

2 ITA Nos. 7754&7755/Mum/2014 M/s. Varad Fashions P. Ltd. 2. On the facts and circumstances of the case and in law, the Commissioner of Income tax (Appeals) erred in confirming penalty of Rs.1,20,300 under Section 272A(2)(k) of the Act.” 3. Ground No. 1 (for both assessment years 2009-10 & 2010-11) 3.1 In this ground, the assessee contends that the learned CIT(A) erred in not affording the assessee opportunity of being heard before confirming the levy of penalty under section 272A(2)(k) of the Act by way of the impugned orders. According to the learned counsel for the assessee, the AO after issuing show cause notices dated 04.10.2011 called upon the assessee to show cause as to why penalty under section 272A(2)(k) of the Act should not be levied in its case for assessment years 2009-10 and 2010-11 for non filing of quarterly TDS statement in Form No. 24Q & 26Q for three years within the stipulated period; proceeded to levy penalties thereunder vide separate orders dated 31.10.2011, before the assessee could furnish its reply in the matter, stating that since no reply was filed, the assessee has not established reasonable cause for the default. 3.2 Aggrieved by the orders of the AO dated 31.10.2011 levying penalty of `1,20,300/- and `83,530/- for assessment years 2009-10 and 2010-11, the assessee preferred appeals before the CIT(A)-14, Mumbai. The learned counsel for the assessee contends that the learned CIT(A) virtually dismissed the assessee’s appeals for both the concerned years exparte, without affording the assessee any opportunity whatsoever of being heard in the matter. According to the learned A.R., a perusal of the orders of the authorities below would evidence that, neither the AO nor the learned CIT(A) has afforded the assessee reasonable opportunity of being heard. The AO merely mentioned that the assessee had not filed any reply/submission to establish reasonable cause for failure to fulfil its obligations under the Act. The learned CIT(A) also, after issuing one notice for hearing on 30.09.2014, dismissed the assessee’s appeals on 08.10.2014 on the ground that none appeared nor any written submission was filed; when actually, the assessee had filed a letter dated 26.09.2014 in the office of the CIT(A)-14, Mumbai, the receipt of which was duly acknowledged/stamped, seeking adjournment of hearing till the last week

3 ITA Nos. 7754&7755/Mum/2014 M/s. Varad Fashions P. Ltd. of October, 2014 since the A.R. was scheduled to travel. The learned A.R. Contends that in the light of the above facts it has been clearly demonstrated that the learned CIT(A) by summarily dismissing the appeals, has violated the principles of natural justice by not affording the assessee adequate opportunity of being heard in the matter before adjudicating the appeal. It is pleaded that in the above circumstances, the impugned orders of the learned CIT(A) for assessment years 2009-10 and 2010-11 be set aside and restored to the file of the learned CIT(A) for adjudication of the issue of levy of penalty afresh on merits after affording the assessee adequate opportunity of being heard and to file submissions/details required. 3.3.1` We have heard the rival contentions and perused and carefully considered the material on record. The grievances of the assessee, according to the learned counsel for the assessee, was that the learned CIT(A) had dismissed the assessee’s appeals for assessment years 2009-10 and 2010-11 summarily, without affording the assessee any opportunity whatsoever of being heard in the matter of levy of penalty under section 271A(2)(k) of the Act by the AO. In this regard, we have perused the impugned orders of the learned CIT(A), both dated 08.10.2014, for the concerned assessment years as well as the assessee’s letters dated 26.09.2014 acknowledged to have been filed in the office of the learned CIT(A) on 30.09.2014 (copies placed on record) seeking adjournment of hearing of appeals to the end of October, 2014 since the learned counsel for the assessee was scheduled for travelling. We observe that in the impugned orders the learned CIT(A), after observing that none appeared nor written submissions were filed, proceeded to dismiss the assessee’s appeals on 08.10.2014. This, inspite of the fact that the assessee had filed two separate letters dated 26.09.2014 seeking adjournment of hearings, which were acknowledged to have been received and were available in her office on 30.09.2014, at least a week before she dismissed both the assessee’s appeals summarily on 08.10.2014. In this factual matrix of the case, as discussed above, we are of the considered view that the learned CIT(A) has grossly violated the principles of natural justice by not affording

4 ITA Nos. 7754&7755/Mum/2014 M/s. Varad Fashions P. Ltd. the assessee adequate opportunity of being heard in the matter of levy of penalty under section 272A(2)(k) of the Act in the case on hand for both assessment years 2009-10 and 2010-11. In this view of the matter, we, in the interest of equity and justice, set aside the impugned order of the learned CIT(A) dated 08.10.2014 confirming the levy of penalty under section 272A(2)(k) of the Act for both assessment years 2009-10 and 2010- 11 and restore this matter to the file of the learned CIT(A) for disposal/ adjudication on merits after affording the assessee adequate opportunity of being heard and to file details/submissions required. It is accordingly ordered. Consequently, grounds of assessee’s appeals are allowed for statistical purposes. 4. In the result, the assessee’s appeals for assessment years 2009-10 and 2010-11 are allowed for statistical purposes. Order pronounced in the open court on 7th October, 2016. Sd/ Sd/- (Sandeep Gosain) (Jason P. Boaz) Judicial Member Accountant Member

Mumbai, Dated: 7th October, 2016

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//True Copy// Assistant Registrar ITAT, Mumbai Benches, Mumbai n.p.