2019 (3) TMI 1159 - AT - Income Tax

Assessment u/s 144 - Levy of penalty u/s. 271(1)(c) - non appearance before AO & CIT(A) - issued notices u/s. 143(2) and u/s. 142(1) - All the notices were again returned back by the postal authority with remarks NF - service through affixture at the address mentioned in the return of income - No intimation to change of address from Ahmadabad to Pune - working Director was in jail other Director being in the advanced age. - HELD THAT - It is an undisputed fact that the assessee neither appeared before Assessing Officer nor made adequate effort to defend the appeal before the First Appellate Authority. Ostensibly, the assessee has not communicated change in address from Ahmedabad to Pune to the Assessing Officer.Under such circumstances the AO had no option but to issue notices on the address available with him. The Assessing Officer issued notices on the address mentioned in the return of income as well as new address of the assessee at Pune. However, the notices were retuned back un-served by the postal authority with remarks left/NF . Thus, AO was constrained to proceed u/s. 144 of the Act. Even before the Commissioner of Income Tax (Appeals) after initial representation none appeared at the time of final hearing of first appeal. Mrs. Dahuram Sridhar one of the Directors of assessee company has filed an affidavit stating reasons for non-representation of assessee before the authorities below. A perusal of affidavit indicate, that the non-appearance of assessee before authorities below was on account of crisis faced by the assessee due to arrest of Director who was actively involved in the conduct as assessee s business and the other Director being in the advanced age. Taking into consideration entirety of facts and the principles of natural justice, we are of considered view that an opportunity should be afforded to the assessee to represent its case before the authorities below. Consequently, the impugned order is set aside and the issues/additions assailed in appeal are restored back to the file of Assessing Officer for denovo adjudication. The Assessing Officer shall grant reasonable opportunity of hearing to the assessee - Appeal of assessee is allowed for statistical purpose with the aforesaid directions.

Summary

Issues:
1. Quantum addition confirmed by Commissioner of Income Tax (Appeals).
2. Penalty u/s. 271(1)(c) confirmed by Commissioner of Income Tax (Appeals).

Issue 1: Quantum addition confirmed by Commissioner of Income Tax (Appeals):
The case involved two appeals filed by the assessee against the exparte orders of Commissioner of Income Tax (Appeals)-6, Ahmedabad. The first appeal, ITA No. 3042/AHD/2013, challenged the quantum addition confirmed by the Commissioner of Income Tax (Appeals). The assessee, a company engaged in trading shares, filed its return of income for the relevant assessment year but failed to appear before the authorities during scrutiny assessment proceedings. The Assessing Officer made various additions to the income returned by the assessee, leading to an ex-parte assessment order. The assessee contended that the non-appearance was due to a change in the registered office address from Ahmedabad to Pune, and the directors were unavailable for various reasons. The Department argued that the assessee did not communicate the change of address to the Assessing Officer. The Tribunal, considering the circumstances and principles of natural justice, set aside the impugned order and directed the issues to be restored back to the Assessing Officer for denovo adjudication, granting the assessee a reasonable opportunity to be heard.

Issue 2: Penalty u/s. 271(1)(c) confirmed by Commissioner of Income Tax (Appeals):
The second appeal, ITA No. 3043/AHD/2013, challenged the penalty levied u/s. 271(1)(c) by the Commissioner of Income Tax (Appeals) on the additions made in the assessment order. Since the Tribunal set aside the additions in the quantum proceedings, the penalty levied u/s. 271(1)(c) did not survive. Consequently, the impugned order confirming the penalty was set aside, and the appeal of the assessee was allowed. In conclusion, the appeal in ITA No. 3042/AHD/2013 was allowed for statistical purposes, and ITA No. 3043/AHD/2013 was also allowed.

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