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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:
This appeal is filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals), NFAC dated 19-Jan-2026 against the penalty order dated 29.03.2022 passed under section 200A of the Income-tax Act (hereinafter referred as 'the Act') by the National Faceless Assessment Centre, New Delhi for the assessment year 2018-19.
The Assessee has raised the following grounds of appeal:
1.“That on the facts and in the circumstances of the case and in law, the penalty order passed under section 271E of the Act is void ab initio, illegal and bad in law and liable to be quashed.
2.That on the facts and in the circumstances of the case and in law, the penalty order under section 271E of the Act has been passed in violation of the mandatory provisions of section 274(2)(b) of the Act, without obtaining the requisite prior approval of the Joint Commissioner.
3.That on the facts and in the circumstances of the case and in law, the Ld. Assessing Officer and the Ld. CIT(A) have erred in levying and sustaining penalty of Rs. 57,02,400/- under section 271E of the Act, and the same is arbitrary, unjustified, and contrary to the provisions of law.
4.That on the facts and in the circumstances of the case and in law, the Ld. CIT(A), NFAC has grossly erred in not condoning the delay in filing the appeal, without appreciating that the delay was due to bona fide and unavoidable circumstances including serious illness of counsel and COVID-related disruption, thereby unjustly denying the assessee an effective opportunity of being heard on merits.
5.That on the facts and in the circumstances of the case and in law, the authorities below have failed to appreciate that the transactions in question were genuine, duly recorded in the books of account and carried out through identifiable banking channels, and therefore no penalty under section 271E was leviable; and further, the action of the Ld. CIT(A) in dismissing the appeal without adjudicating the issues on merits is in violation of the settled principles of natural justice and is thus bad in law and liable to be quashed.
6.That the Ld. CIT(A) has erred in not admitting and properly adjudicating the evidences filed by the assessee, which go to the root of the matter and establish that no cash payment was made, thereby rendering the order bad in law.”
Brief facts of the case are that the assessee is engaged in the business of share trading, investment activities, real estate and earning interest income. For the Assessment Year 2018-19, the assessee filed its Return of Income on 11.10.2018 declaring a total income of Rs.1,54,73,800/-. The return was processed in accordance with law and order u/s143(1) were passed accepting the returned income.
The ld AO was in possession of information that the assessee had made a repayment of a loan of Rs.34,13,520/- in cash to Ansal Properties and Infrastructure Limited during the F.Y. 2017-18 relevant to A.Y. 2018-19. By prepaying loan in cash for an amount in excess of Rs. 20,000/- the assessee had violated provision laid down u/s 269T of the Act. Penalty proceedings u/s 271E of the Act was initiated and show-cause notice for penalty was issued on 04.08.2021 & served upon the assessee. As the assessee failed to established the fact that the said amount has been paid by any mode other than cash, the Addl./Jt. CIT came to conclusion that payment made amounting to Rs. 57,02,400/- was in violation of section 269T and levied penalty u/s. 271E of the Act at Rs. 57,02,400/-.
Aggrieved, assessee was in appeal before the ld. CIT(A). There was a delay of 1197 days in filing appeal before the CIT(A). The CIT(A) dismissed the appeal solely on the ground that the appeal was delayed. Aggrieved, assessee is now in appeal before us. The ld. CIT(A) dismissed the appeal of the assessee.
Before us, ld. Counsel for the assessee submitted that upon receipt of the penalty order dated 29.03.2022, the Assessee acted diligently and on professional advice, and in the bona fide belief that Page 3 of 6 the penalty order suffered from an error apparent on the face of the record-in as much as the lower authority AO had overlooked that the payments were made in order to purchase Storage Space through Banking channels only and the Assessee was entitled to utilise the remedy of rectification under section 154 of the Act. The assessee filed an application u/s 154 on 08.05.2024, followed by a further online rectification application on 26.12.2024 upon the facility becoming available. Neither applications were disposed off and no opportunity was given to the assessee to explain the matter either personally or through video conferencing. Thus there was the delay of 1,197 days in filing appeal. It is further submitted that its Authorised Representative, Shri Sunil Kapoor (aged about 70 years), suffered Pneumonia, suspected COVID. The ld counsel further made an alternative submission to restore the appeal to the file of the learned CIT(A)/NFAC/ Ld. AO for disposal on merits after affording the Assessee an effective opportunity of hearing and permitting it to place on record the additional evidence of medical certificate, hospital records and other supporting evidence.
Per contra the ld DR relied on the order of the CIT(A).
We have heard the rival submissions and perused the material available on record. Upon considering the explanation submitted by the assessee, we are satisfied that there is reasonable and sufficient cause for the delay. Following the decision of the hon’ble Supreme Court's in Page 4 of 6 Collector, Land Acquisition, Anantnag v. Mst. Katiji (1987) mandating to render substantial justice on merits rather than scuttling a case on technical or procedural grounds like time-bars, we condone the delay before the CIT(A).
We find that the CIT(A) has not applied his mind on the issues before him as per the provision of section 250(6) of the Act. In such factual matrix, and in the interest of natural justice, we set aside the appeal to the ld. CIT(A) for adjudication afresh. The CIT(A) is directed to consider the additional evidences and materials and decide the issue of penalty u/s 271E. The CIT(A) is directed to accord three effective opportunities to the assessee to present its case. Likewise, the assessee is directed to avail the opportunities and furnish evidences/documents as required by the CIT(A).
In the result, appeal filed by assessee in ITA No.3513/Del/2026 is allowed for statistical purposes.