2018 (5) TMI 1011 - AT - Income Tax

Penalty u/s.271E - reasons for noncompliance of notice of hearing before the Assessing Officer as well as the CIT(A) - Held that - In order to render substantial justice to the assessee, all materials facts are required to be brought on record to adjudicate the issue. For doing to, an opportunity has to be allowed to the assessee. Further, we are alive to the fact that the assessee had been a habitual defaulter in complying with the notices issued by the Assessing Officer as well as the CIT(A). The assessee has undertaken before us that if one more opportunity is granted to the assessee, the assessee will definitely appear before the Assessing Officer and present his case. Keeping this undertaking of ld A.R. of the assessee in view in the open court, we set side the orders of lower authorities and restore the matter back to the file of the Assessing Officer with a direction to re-adjudicate the issues involved in the present appeal after allowing reasonable opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purposes.

Summary

Issues: Appeal against ex-parte order confirming penalty under Section 271 E of the IT Act, 1961 by the CIT(A) for the assessment year 2006-07.

Detailed Analysis:

1. The appellant raised grounds of appeal against the ex-parte order passed by the Commissioner of Income Tax (Appeals) confirming the penalty under Section 271 E of the IT Act, 1961. The appellant argued that the order was arbitrary, excessive, and against the principles of natural justice as the appellant had appeared through its advocate, filed written submissions and arguments, and the order was passed ex-parte for non-submission of documents. The appellant emphasized the importance of natural justice and argued that the order should have considered the arguments and submissions made before confirming the penalty.

2. The appellant contended that the repayment of a loan or deposit through journal entries of ?20,000 or more, even if a bonafide transaction, does not violate Section 269T of the IT Act, 1961. The appellant argued that the section does not differentiate between bonafide and non-bonafide transactions and that the repayment through book entries in the ordinary course of business does not fall under the purview of Section 269T. Therefore, the invocation of Section 271 E without a violation of Section 269T was deemed arbitrary, excessive, and against the law.

3. The appellant further argued that the Commissioner of Income Tax (Appeals) should have considered the information available in the assessment record of the appellant before confirming the penalty under Section 271 E. The appellant highlighted that since there was no violation of Section 269T, the invocation of the penalty provision was arbitrary, excessive, and against the law. The appellant sought relief from the penalty based on the grounds presented.

4. During the proceedings, it was noted that the appellant had failed to comply with notices of hearing before the Assessing Officer and the CIT(A). The appellant's representative could not provide a satisfactory explanation for the non-compliance. Despite the opposition from the Revenue, the Tribunal decided to grant one more opportunity to the appellant to present its case before the Assessing Officer. The Tribunal acknowledged the appellant's undertaking to comply if given another chance and set aside the orders of the lower authorities, directing a re-adjudication of the issues after affording a reasonable opportunity of hearing to the appellant.

5. In light of the habitual default in complying with notices, the Tribunal imposed a penalty of ?10,000 on the appellant for wasting the time of the authorities. The appellant was instructed to deposit the penalty by a specified date and provide proof of payment to the Assessing Officer and the Tribunal. The appeal was allowed for statistical purposes, emphasizing the importance of compliance and fair adjudication in tax matters.

This detailed analysis covers the issues raised in the appeal against the ex-parte order confirming the penalty under Section 271 E of the IT Act, 1961 for the assessment year 2006-07, providing a comprehensive overview of the arguments, considerations, and the Tribunal's decision.