2021 (2) TMI 1069 - AT - Income Tax

Penalty u/s 271(1)(c) - assessment order passed u/s. 147 r.w.s. 144 that the AO issued only one notice u/s. 142(1) on 30.05.2016 and the ex parte assessment order was passed - HELD THAT - After issuing the notice u/s. 142(1), the Assessing Officer has not mentioned any other notice or show cause notice issued to the assessee. Thus, it is apparent that the assessee was not given further opportunity by the Assessing Officer, either to show cause for passing the ex parte assessment u/s. 144 or to furnish the requisite details. Appeal appeals arising from the penalty order passed u/s. 271(1)(b) of the Act ought to have been decided after the adjudication of the quantum appeal pending before the Ld. CIT(A). Accordingly, the matter is set aside to the record of the CIT(A) for deciding the same afresh after adjudication of the quantum appeal as well as giving one more opportunity of hearing to the assessee. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
Appeal against penalty under section 271(1)(b) of the Income Tax Act, 1961 for the A.Y. 2009-10.

Analysis:
The appeal was against the penalty imposed under section 271(1)(b) of the Income Tax Act, 1961 for the assessment year 2009-10. The assessee raised various grounds challenging the penalty order. The Ld. AR argued that both the assessment order and the penalty order were passed ex parte without giving the assessee a proper opportunity to be heard. The Assessing Officer issued a notice under section 142(1) on 30.05.2016 and subsequently passed the assessment order on 28.06.2016 without further communication or opportunity for the assessee to comply. The Ld. AR contended that this violated the principles of natural justice as the assessee was not given a fair chance to present their case and provide the required details. The assessee had also filed an appeal against the assessment order, which was pending before the CIT(A). Therefore, the Ld. AR requested the matter to be remanded back to the CIT(A) for a fresh decision after the quantum appeal was resolved.

On the contrary, the Ld. D.R. opposed sending the matter back to the CIT(A), stating that the assessee had been given sufficient opportunities for hearings, but no one attended, resulting in the appeal being dismissed ex parte. The Ld. D.R. relied on the orders of the lower authorities to support this position.

After considering the arguments and the records, the Tribunal found that the Assessing Officer had indeed passed the assessment order hastily without granting the assessee a proper opportunity to respond or furnish necessary details after issuing the initial notice under section 142(1). In the interest of justice, the Tribunal decided that the penalty appeal should be re-examined by the CIT(A) after the quantum appeal was resolved. Therefore, the matter was remanded back to the CIT(A) for a fresh decision, allowing the assessee another opportunity to be heard. Consequently, the appeal of the assessee was allowed for statistical purposes.

This judgment highlights the importance of adhering to the principles of natural justice and providing adequate opportunities for the assessee to present their case before passing ex parte orders, emphasizing the need for a fair and just process in tax proceedings.