2022 (12) TMI 1422 - AT - Income Tax

CIT(A) passed ex parte - Levy of penalty u/s 271(1)(c) - Denial of natural justice - Addition of unconfirmed sundry creditors - HELD THAT - We are of the view that by dismissing the appeal without considering the issue on merits, Learned CIT(A) has failed to follow the mandate required in Sub Section (6) of Section 250 - it is also a well settled principle of natural justice that sufficient opportunity of hearing should be offered to the parties and no parties should be condemned unheard. We set aside the impugned order of CIT(A) and restore the issue to the file of CIT(A) for re-adjudication of the issue after granting sufficient opportunity of hearing to the assessee and considering the submissions of the assessee - Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
Appeal against order of Commissioner of Income Tax (Appeals)-16 for Assessment Year 2009-10; Levy of penalty under section 271(1)(c) of the IT Act; CIT(A) dismissing the appeal without considering merits; Restoration of issue to CIT(A) for re-adjudication after setting aside impugned order.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals)-16 for Assessment Year 2009-10. The assessee, engaged in manufacturing and trading, had electronically filed a return of income for the year. The assessment was framed under section 143(3) with a total income determined, including an addition of unconfirmed sundry creditors. The CIT(A) dismissed the appeal, leading to the current appeal before the ITAT. The grounds raised by the assessee included challenging the legality of the order, penalty notice under section 271(1)(c), and the order upholding by the CIT(A).

Regarding the levy of penalty under section 271(1)(c) of the IT Act, the Learned AR argued that the quantum addition, forming the basis of the penalty, had been set aside by the ITAT in a previous order. Thus, the penalty was deemed not sustainable. On the other hand, the Learned DR contended that the CIT(A) had not addressed the appeals on merits, suggesting a restoration of the matter to lower authorities for proper examination.

After hearing the submissions, the ITAT noted that the CIT(A) had passed an ex parte order without deciding on the merits of the case, which was against the requirements of Section 250(6) of the IT Act. It emphasized the importance of natural justice and providing adequate hearing opportunities to all parties. Consequently, the ITAT set aside the CIT(A)'s order and directed a re-adjudication after granting sufficient hearing opportunities to the assessee and considering their submissions. The assessee was instructed to provide the necessary details as requested by the lower authorities. As a result of restoring the issue to the CIT(A), the ITAT did not delve into the merits of the grounds raised by the assessee, allowing the appeal for statistical purposes.

In conclusion, the ITAT allowed the appeal of the assessee for statistical purposes, and the order was pronounced in open court on the specified date.