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Judgment
Per Kavitha Rajagopal, JM:
This is an appeal filed by the assessee challenging the order passed by the Ld. Commissioner of Income Tax (Appeals) [‘the Ld. CIT(A)’, for short] under Section 250 of the Income Tax Act, 1961 ('the Act' for short) for Assessment Year (‘AY’, for short) 2012-13.
It is observed that the present appeal has been filed belatedly with a delay of 550 days beyond the period of limitation for which the assessee has filed an application along with an affidavit for condoning the said delay. Upon perusal of the same, we deem it fit to hold that the assessee had ‘sufficient cause’ for the said delay. Hence, the delay is hereby condoned.
The assessee has raised the following grounds:-
“l. That on the facts and in the circumstances of the case and in law, the Ld.CIT(A) (Ld. CIT(A)) has erred in confirming the penalty of Rs. 9,14,76,230 levied by the learned Assessing Officer (Ld. AO)u/s 271(1)(c) of the Income Tax Act, 1961 ('the Act").
2.That the Ld. CIT(A) has failed to appreciate that the penalty order passed by the Ld. AO was barred by limitation and therefore void ab initio and liable to be quashed. The impugned orders have been passed without service of any notice of hearing to the assessee.
3.That the Ld. CIT(A) has erred in law and on facts in upholding the levy of penalty despite the fact that the penalty proceedings were initiated on the basis of a vague and defective notice issued without specifying the exact charge, namely concealment of income or furnishing of inaccurate particulars of income.
4.That the Ld. CIT(A) has effed in sustaining penalty in respect of marked to market loss claimed by the appellant, ignoring that the claim was bona fide, fully disclosed in the return of income and supported by books of account and material on record.
5.That the Ld. CIT(A)has erred in confirming penalty in relation to additions made u/s 68 and 69 of the Act, without appreciating that the additions were made on estimate, presumptions or on debatable issues and therefore no penalty was leviable.
6.That the Ld. CIT(A)has erred in confirming penalty with respect to addition sustained u/s 40A(3A) of the Act, when the nature of additions was changed by the Ld. CIT(A).
7.That the appellant craves leave to add, alter, amend or withdraw any of the above grounds of appeal before or at the time of hearing.”
The brief facts are that the assessee is an individual and had filed the return of income for the year under consideration dated 08.03.2013 declaring the total income at Rs.14,96,636/-. The assessee’s case was selected for scrutiny and the ld. AO passed the assessment order u/s 143(3) of the Act dated 30.03.2015 determining the total income at Rs.31,04,06,763/-, after making various additions/disallowances. The Ld. AO also initiated penalty proceedings u/s 271(1)(c) of the Act. Notice u/s 274 r.w.s. 271(1)(c) of the Act dated 30.03.2015 was issued and served upon the assessee where the Ld. AO sought for the assessee’s submission as to why penalty should not be levied u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income. As the assessee has filed an appeal before the Ld.CIT(A) challenging the quantum addition, the penalty proceedings was kept in abeyance till the disposal of the appeal by the Ld.CIT(A) subsequent to the Ld. CIT(A)’s order dated 31.07.2019 where, in the quantum appeal, the Ld.CIT(A) had partly allowed the appeal of the assessee. Subsequently, a show cause notice u/s 271(1)(c) of the Act dated 19.01.2022 was issued to the assessee. Despite several notices issued by the Ld. AO, the assessee failed to comply with the said notices and, hence, the Ld. AO passed the penalty order u/s 271(1)(c) dated 16.03.2022 levying penalty of Rs.9,14,76,230/- u/s 271(1)(c) of the Act. Aggrieved by the said order, the assessee was in appeal before the first appellate authority, who, vide an ex parte order dated 20.08.2024, dismissed the appeal filed by the assessee for non-prosecution. The assessee is in appeal before us challenging the order of the Ld.CIT(A).
We have heard the rival submissions and perused the relevant material available on record. It is observed that the assessee has filed an appeal before the first appellate authority challenging the order of the Ld. AO, both on legal grounds challenging the validity of notice as well as on the merits of the penalty. The assessee was non-compliant for almost eight notices issued by the Ld.CIT(A) and, hence, an ex parte order was passed dismissing the appeal filed by the assessee. The Ld. AR for the assessee argued on the legal ground pertaining to the validity of the penalty notice contending that the same is vague and a defective notice issued without specifying the exact charge by striking off the irrelevant limb as to whether the same is for concealment of income or for furnishing inaccurate particulars of income. The Ld. AR relied on the decision of the Hon’ble jurisdictional High Court in the case of PCIT vs. Gragerious Projects (P) Ltd., [2024] 169 taxmann.com 291 (Delhi) and prayed that the penalty order be quashed.
The Ld. DR, on the other hand, controverted the said fact and stated that the assessee has been non-compliant both during the penalty proceedings before the Ld. AO as well as before the Ld. CIT(A). The Ld. DR further stated that these grounds have already been raised before the Ld.CIT(A) who has not adjudicated for the reason that the assessee was non-compliant. The Ld. DR prayed that the orders of the lower authorities be upheld.
In the above facts of the case, it is evident that the assessee has raised the legal ground which was argued before us along with other grounds on the merits. The Ld.CIT(A) has dismissed the appeal filed by the assessee for non-prosecution without adjudicating both the legal ground as well as on the merits. In order to extend the assessee with one more opportunity, we deem it fit to remand all these issues back to the file of the Ld.CIT(A) with a direction to adjudicate the issue afresh both on the legal ground as well as on the merits of the case by adhering to the principles of natural justice and in the interest of justice dispensation. The assessee is directed to strictly comply with the proceedings before the Ld.CIT(A) without any undue delay from his side. Hence, all the grounds of appeal raised by the assessee are hereby allowed for statistical purpose.
In the result, the appeal filed by the assessee is hereby allowed for statistical purpose.