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आयकर अपीलीय अिधकरण,च"ीगढ़ "ायपीठ “बी” , च"ीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: HYBRID MODE "ी आकाश दीप जैन, उपा"" एवं "ी िव"म िसंह यादव, लेखा सद" BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM आयकर अपील सं./ िनधा"रण वष" / Assessment Year : 2017-18 The HP State Co-operative The DCIT बनाम Marketing & Consumers Federation Circle, Shimla Limited (Himfed) Himfed Head Office, Near Victory Tunnel, Shimla "ायी लेखा सं./PAN NO: AAAAH0084J अपीलाथ"/Appellant ""थ"/Respondent िनधा"रती की ओर से/Assessee by : Shri Balkrishan, ITP राज" की ओर से/ Revenue by : Dr. Ranjit Kaur, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 03/10/2024 उदघोषणा की तारीख/Date of Pronouncement : 09/10/2024 आदेश/Order PER VIKRAM SINGH YADAV, A.M. :
This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC, Delhi dt. 23/05/2022 pertaining to Assessment Year 2017-18. 2. In the present appeal, Assessee has raised the following grounds of appeal:
1. On the facts and in the circumstances of the case, considering judicial pronouncements as well as in law, the authorities have erred and not justified in initiation of penalty proceedings and imposing penalty of Rs. 13,75,802/- under section 270A specifically: 1.1 that the quantum assessment order passed by applying the provisions of Section 14A r.w. Rule 8D(A was itself not in oeder, being on the basis of unfounded presumption by wrong disallowance of an amount of Rs. 22,93,002/- towards so called expenditure which may have incurred on the income earned on dividend that also non observing the prescribed procedures for providing ample opportunity and within the tie limit provisions of section 275 and section 282. 1.2 that the Ld. CIT(A) / NFAC has erred by upholding the action of the Ld. AO for initiation of penalty proceedings in assuming jurisdiction to invoke Rule 8D r.w.s 14A(2) of the IT Act without any formation of opinion and also thereby holding that a valid satisfaction has been recorded by the Ld. AO which becomes the basis for initiation of penalty proceedings and thereafter levying penalty of Rs. 1375802/-.
On the facts and in the circumstances of the case, considering judicial pronouncements as well as in law, the Ld. CIT(A)/NFAC was not justified in disposing off the appeal without properly serving any Notice upon the ’appellant’ and also without adjudicating case on merits. 3. Learned CIT(A)/NFAC has erred in upholding the penalty proceedings and its levy of penalty of Rs. 1375802/- by invoking section 270A(9)(a)j ;by agreeing to hold that the appellant deliberately under reported income and / or misreported the income, which on facts are without jurisdiction, totally incorrect and, therefore contrary to the spirit of taxing the correct income and / or levy of penalty rendering it arbitrary, illegal and bad in law. 4. HIMFED the appellant craves leave to make addition or alteration, if any in the grounds of appeal
at the tie of hearing wherefore in the light of facts presented, issues, raised, arguments presented, the Appellant pray to kindly provide the relief as per Grounds of Appeal.
3. At the outset it is noted that there is delay in filing the present appeal by 241 days as pointed out by the Registry. During the course of hearing, the Ld. AR taken us through the condonation application as well as the affidavit filed by the assessee and it was submitted that due to inaction and negligence on the part of the Audit Officer who was on the verge of the retirement and the Tax Advisor, the delay has happened in filing the present appeal. It was submitted that the delay came to the notice to the assessee on 23/12/2022 when the assessment proceedings for A.Y 2021-22 were completed and assessment order dt. 23/12/2022 was received at the Head Office of the assessee in Shimla wherein the huge tax demand was raised. It was further submitted that the assessee’s management thereafter decided to remove the then tax advisor for his lack of diligence in attending to the tax proceedings and the Audit Officer had also retired by that time and thereafter, the assessee contacted its earlier advisor who helped the assessee in preparing the necessary appeal for A.Y. 2021-22 which was filed on 20/01/2023 wherein the high pitched assessment was made with income of Rs. 4,67,16,573/- and the tax liability of Rs. 1,93,31,269/- against NIL income as per the returned income and the present appeal alongwith paper book was thereafter filed on 20/03/2023. It was accordingly submitted that the delay so caused in filing the present appeal was due to in action and negligence on the part of its Officer who has since retired as well as on the part of the Tax Advisor who has since been removed and a new Tax Advisor have been appointed by the assessee. It was submitted that the delay so happened was for reasons beyond the control of the assessee and the assessee cannot penalized for inaction and negligence on the part of its audit officer and Tax Advisor and in the interest of substantial justice, the delay in filing the present appeal may be condoned and the matter may be taken up on merits.
The Ld. DR is heard who has objected to the condonation application so filed by the assessee. It was submitted that there is a substantial delay in filing the present appeal and no reasonable cause has been shown in explaining the delay in filing the present appeal so filed by the assessee.
After hearing both the parties and considering the material available on the record, we find that it was primarily due to inaction on the part of one of the employees who was on verge of retirement (and who has since retired) as well as on the part of Tax Advisor (who has since been removed from his services), the delay has happened in filing the present appeal. And as soon as the assessee’s management was ceased of the matter, necessary corrective steps were taken in removing the tax advisor, appointing the new advisor and steps were taken in filing the present appeal. Taking into consideration the facts and circumstances of the present case, we find that the assessee deserves to be heard on merits taking into consideration the well established principles as laid down by the Courts from time to time wherein it has been held that wherever technicalities and substantial justice are pitted against each other, the cause of substantial justice should prevail. Keeping in view the same, the delay in filing the present appeal is hereby condoned and the appeal is admitted for adjudication on merits.
On merits we find that the Ld. CIT(A) has sustained the levy of penalty under section 270A of the Act amounting to Rs. 13,75,802/- levied by the AO. In this case, the assessment proceedings were completed wherein disallowance of Rs. 22,93,002/- was made under section 14A r.w. Rule 8D of the Act and thereafter the penalty proceedings were separately initiated for misreporting of income by issue of show cause under section 274 r.w.s 270A of the Act dt. 29/11/2019 and thereafter, the NFAC Delhi has recorded the findings that it was the duty of the assessee to show correct figure in the return of income. However in order to evade taxes, the assessee deliberately did not made the disallowance under section 14A r.w. Rule 8D of the Income Tax Rules and said failure on the part of the assessee constitute willfull under reporting of the income to the extent of Rs. 22,93,002/- and thereafter, he recorded his satisfaction that it is a fit case for levy of penalty under section 270A for under reporting of income in consequence of misreporting thereof and penalty @ 200% of tax payable on the under reported income amounting to Rs. 13,75,802/- was levied and which on appeal has been sustained by the Ld. CIT(A).
On perusal of the order of the Ld. CIT(A), we find that the same has been passed ex-parte qua the assessee. In this regard, the Ld. AR has submitted that due to inaction and negligence on the part of the Tax Advisor who was appointed to handle the present matter, the proceedings before the Ld. CIT(A) could not be attended to and the assessee be allowed an opportunity to represent its case and the matter may be set aside to the fie of the Ld. CIT(A).
The Ld DR is heard who has not raised any specific objection where the matter is set aside to the file of the Ld. CIT(A).
Heard the rival contentions and perused the material available on the record. Considering the facts and circumstances of the present case and the limited prayer for setting aside the impugned order to the file of the ld CIT(A) for deciding the same on merits which has not been objected to by the Revenue, we deem it appropriate to set aside the matter to the file of the Ld. CIT(A) to decide the same afresh as per law after providing reasonable opportunity to the assessee.