2020 (3) TMI 537 - AT - Income Tax

Penalty u/s 271(1)(c) - Directors could not represent before the first appellate authority as regards the penalty imposed u/s 271(1)(c) - information received from the Excise Authorities, AO issued notice u/s 148 and completed the assessments u/s 143 r.w.s. 147 - On quantum assessments, the appeals were preferred by the assessee before the first appellate authority, who partly allowed the appeals of the assessee - HELD THAT - The earlier Directors of the assessee-company had resigned on 09.04.2003. After the resignation of the earlier Directors, the Central Excise Department had conducted a search at the premises of the assessee-company on 08.07.2003. The earlier Directors were not associated with the assessee-company s matters subsequent to their retirement and were not aware of the assessments completed and consequent penalty levied. Being unaware, the ex- Directors did not represent the matters either in quantum proceedings or in penalty proceedings. The present Directors of the assessee-company has faced financial difficulties and labour unrest, and the same is evident from the documents produced before the Tribunal. Consequent to labour unrest and the financial difficulties faced by the present Directors, they also could not represent before the first appellate authority as regards the penalty imposed u/s 271(1)(c) of the I.T.Act. The penalty proceedings initiated are separate from the quantum assessments and if the assessee can prove in penalty proceedings that the additions in the quantum assessments are not warranted, necessarily, the penalty imposed has to be deleted. Since the assessee has not been represented before the first appellate authority with regard to the penalty proceedings, in the interest of justice and equity, we are of the view that as a last chance, the assessee should be granted one more opportunity of being heard. The assessee shall cooperate with the Department and furnish necessary documents and evidences to prove its case. For the above said purpose the issue is restored to the CIT(A) - Appeal allowed for statistical purposes.

Summary

Issues:
- Delay in filing appeals by ex-Directors of the assessee-company
- Condonation of delay due to financial crises, labour unrest, and other difficulties
- Quantum assessments and penalty orders under section 271(1)(c) of the I.T.Act
- Imposition of penalty for assessment years 2000-2001 to 2014-2015
- Appeal against penalty orders before the Tribunal
- Lack of representation before the first appellate authority
- Restoration of the issue to the CIT(A) for further proceedings

The judgment addresses the delay in filing appeals by ex-Directors of the assessee-company, which were directed against orders of the CIT(A) under section 271(1)(c) of the I.T.Act for assessment years 2000-2001 to 2014-2015. The ex-Directors filed appeals with a delay of 329 days, citing reasons such as financial crises, labour unrest, and unawareness of assessments and penalty proceedings. The Tribunal, after considering the difficulties faced by the assessee-company, condoned the delay, emphasizing that no latches could be attributed to the company for the belated filing of appeals, and proceeded to dispose of the appeals on merits.

The quantum assessments were completed by the Assessing Officer under section 147 of the I.T.Act after a search by the Central Excise Department revealed under-invoicing and production suppression by the assessee-company. Appeals against quantum assessments were partly allowed by the first appellate authority and subsequently confirmed by the Tribunal. Following the dismissal of quantum assessment appeals, penalty proceedings were initiated under section 271(1)(c) of the I.T.Act for the same assessment years, resulting in penalties totaling ?28,03,461. The CIT(A) dismissed the appeals against the penalty orders, leading the assessee to appeal before the Tribunal.

The Tribunal noted that the ex-Directors were not aware of the assessments and penalties post-retirement and that the present Directors faced financial difficulties and labour unrest, hindering their representation before the authorities. Acknowledging the separate nature of penalty proceedings from quantum assessments, the Tribunal granted the assessee one more opportunity to be heard before the CIT(A) to prove its case by cooperating with the Department and providing necessary documents and evidence. Consequently, the issue was restored to the CIT(A) for further proceedings, and the appeals were partly allowed for statistical purposes.

In conclusion, the Tribunal's judgment addressed the delay in filing appeals, the imposition of penalties under section 271(1)(c) of the I.T.Act, lack of representation before the first appellate authority, and the restoration of the issue to the CIT(A) for additional proceedings, ensuring the assessee's right to be heard and present its case effectively.