TLG India Private Limited vs National Faceless Appeal Centre, Delhi

PER MAHAVIR SINGH, VP:

This appeal by the Assessee is emanating from the order of the National Faceless Appeal Centre, (NFAC), Delhi in Appeal No. CIT(A), Delhi-4/10010/2019-20 (Manual Appeal Register Number: 232/19-20) dated 06.11.2025, arising out of the Penalty order dated 26.3.2019 passed u/s. 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred the Act) relating to assessment year 2013-14.

None appeared on the behalf of the assessee.

Brief facts of the case are that assessee is a private limited company, filed its return of income foray 2013-14 on 28.4.2014 declaring total income of Rs. 23,58,050/-. The assessment was completed u/s. 143(3) on 28.4.2016 at Rs. 1,32,03,352/-. Subsequently, vide rectification order u/s. 154/143(3) dated 30.7.2017, the assessed income was revised to Rs. 1,51,17,144/- after making the disallowances on account of prior period expenses amounting to Rs. 13,32,922/-; provision for expenses amounting to Rs. 19,13,792/-; disallowance u/s. 40(a)(ia) – non deduction amounting to Rs. 95,12,380/-. Against the above, assessee preferred the appeal before the Ld. CIT(A) on 09.04.2016, which was dismissed vide order dated 30.1.2018 due to non-appearance and non-prosecution. Aggrieved, the assessee preferred an appeal before the ITAT on 25.3.2019. The ITAT vide its order dated 24.5.2022 set aside the quantum additions to the file of the Ld. CIT(A) for fresh consideration. In the meantime, the Assessing Officer initiated penalty proceedings u/s. 271(1)(c) vide notice dated 23.3.2016 and imposed penalty of Rs. 39,42,560/- vide order dated 26.3.2019, on the ground that the assessee had concealed particulars of income and furnished inaccurate particulars by claiming inadmissible expenses and failing to deduct TDS on foreign remittances. Against the penalty order, assessee preferred the appeal before the Ld. CIT(A), who vide his impugned order dated 6.11.2025 has dismissed the appeal of the assessee by noting that assessee was consistently non-cooperative, failed to discharge burden of proof and unable to submit the evidence to justify his claim for not levying the penalty. Aggrieved, assessee is in appeal before the Tribunal.

On perusing the grounds of appeal raised by the assessee, the contentions of the assessee is that Ld. CIT(A) erred in passing the order without providing sufficient opportunity of being heard; CIT(A) erred in not appreciating that penalty should not be levied merely on the ground that the AO has made additions/ disallowances in the quantum proceedings for the captioned assessment year; levying penalty without appreciating that entire expenditure incurred by the assesssee is an allowable expenditure under the Act and merely because a claim is not accepted by the AO, it does not amount to furnishing inaccurate particulars of income; that levying penalty under section 271(1)(c) of the Act in respect of additions / disallowances made for the subject assessment year, without verifying whether such additions / disallowances tantamount to furnishing inaccurate particulars of income; non-striking off the inappropriate portion of the notice issued under section 274 r.w.s. 271(1)(c) of the Act, thereby not indicating the ground on which penalty proceedings have been initiated in case of the appellant, and hence the penalty proceedings undertaken by the AO are bad in law and ought to be quashed and levying penalty on the assessee when the quantum appeal is pending before the CIT(A) for fresh adjudication.

On the other hand, Ld. DR relied upon the orders of the authorities below.

We have heard the Ld. DR and perused the records, especially the aforesaid contentions raised by the assessee in the grounds of appeal. It is an admitted fact that in this case assessment was completed u/s. 143(3) on 28.4.2016 at Rs. 1,32,03,352/-. Subsequently, vide rectification order u/s. 154/143(3) dated 30.7.2017, the assessed income was revised to Rs. 1,51,17,144/-, against which assessee appealed before the Ld. CIT(A), who dismissed the same due to non-appearance and non-prosecution. Aggrieved, the assessee preferred an appeal before the ITAT and the ITAT vide its order dated 24.5.2022 has set aside the quantum additions to the file of the Ld. CIT(A) for fresh consideration. We observed that Ld. CIT(A) dismissed the appeal of the assessee by holding that since the assessee was consistently non-cooperative, failed to discharge the burden of proof and unable to submit the evidence to justify his claim for not levying the penalty. It is also an admitted fact that the quantum additions have already been set aside by the Tribunal to the file of the CIT(A) for fresh consideration and penalty appeal was dismissed by the Ld. CIT(A) due to non-prosecution, thus, keeping in view the aforesaid factual matrix and in the interest of justice, in our view, the penalty in dispute needs to be set aside to the file of the ld. CIT(A) for fresh consideration, after giving adequate opportunity of being heard to the assessee. Needless to add that the assessee should fully cooperate with the Ld. CIT(A) and produce all the evidences before him to canvass his case properly. We hold and direct accordingly.

In the result, the Assessee’s appeal is allowed for statistical purposes.