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TMI Blog2024 (10) TMI 1473X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The ld. CIT (A) erred in law as well as on the facts of the case in confirming the penalty u/s 271B of the Act of Rs. 1,50,000/- imposed by the AO. The penalty so imposed by the AO and confirmed by the ld. CIT (A) being totally contrary to the provisions of law and facts kindly be deleted in full. 4. The appellant prays your honour to add, amend or alter any of the grounds of the appeal on or before the date of hearing. 2. The brief facts of the case are that the assessee is a limited company. The assessment in this case was completed under section 144 read with section 147 of the IT Act, 1961 on 31.10.2018 at a total income of Rs. 5,08,87,740/-. The AO has noticed that the appellant has not maintained books of account and got the same audited under section 44AB of the Act. The AO while framing the assessment also initiated penalty proceedings under section 271B for non-maintenance of books of accounts. During the proceedings the AO issued various notices to the assessee which were duly replied by the assessee in timely manner. However, unsatisfied with the response of the assessee, the AO passed penalty order dated 30.04.2019. Aggrieved by the order of AO, the assessee pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is quite basic for them to have lost sight of such communication if any sent by the department. Another aspect to take note of is that COVID-19 was still prevalent at that time and activities did not resume with full force and it was only in March 2022, the normalcy could have been said to be restored as evident from the order of Apex court passed on dated 23.03.2020 in Suo motu Writ Appeal (Civil) No. 3 of 2020 on the issue of law of limitation holding as under: "...The period from 15-3-2020 till 28-2-2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings." In the meanwhile, the Central Government was continuously relaxing the time limits for taking actions/making compliance through TOLA. In these circumstances there appears no justified reason at all as to why the ld. CIT(A) was issuing notices for such a short period of 7-10 days only. Also there was no urgency to pass the appellate order hastily. Therefore, there is no hesitation to say that the ld. CIT(A) just to show a disposal on his part, passed the impugned order in complete disregard to principles of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is co-terminus with that of the ITO, that she can do what the ITO can do and also direct him to do what he failed to do. In this context, useful reference may also be made to Hon'ble Apex Court's decisions in the cases of CIT vs. Rai Bahadur Hardutroy Motilal Chamaria 66 ITR 443 (SC) and CIT vs. B.N. Bhattachargee 118 ITR 461 (SC) for the proposition that an assessee having once filed an appeal, cannot withdraw it and even if the assessee refuses to appear at the hearing, the first appellate authority can proceed with the enquiry and if he finds that there has been an underassessment, he can enhance the assessment. Just as, once the assessment proceedings are set in motion, it is not open to the Assessing Officer to not complete the Assessment Proceedings by allowing the Assessee to withdraw Return of Income; it is similarly, not open for Ld. CIT(A) to not pass order on merits by dismissing the appeal in limine, whether on account of non-prosecution of appeal by the Assessee or due to the Assessee seeking to withdraw the appeal or if the assessee does not press the appeal. When the Commissioner (Appeals) dismisses the appeal of assessee in limine for non-prosecution of appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it dear that while considering the appeal, the CTT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact, the CIT(A) is obliged to dispose of the appeal on merits. In fact, with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CTT(A) is co-terminus with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore, just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CTT(A) to dismiss the appeal on account of non-prosecu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must make what he honestly believes to be a fair estimate of the proper figure of assessment, and for this purpose he must be able to take into consideration local knowledge and repute in regard to the assessee's circumstances, and his own knowledge of previous returns by and assessments of the assessee and all other matters which he thinks will assist him in arriving at a fair and proper estimate; and though there must necessarily be guess-work in the matter, it must be honest guess-work [CIT Vs. Laxmi Narain Badridas, (1937) 5 ITR 170, 180 (PC), reversing (1934) 2 ITR 246 (Nag); CIT Vs. S. Sen, (1949) 17 ITR 355 (Orissa); Singh Engineering Works Vs. CIT, (1953) 24 ITR 93 (All); M.A. Rauf Vs. CIT, (1958) 33 ITR 843 (Pat); Mohanlal Mahribal Vs. CIT, (1982) 133 ITR 683 (MP) ; Ganga Prasad Sharma Vs. CIT, (1981) 132 ITR 87 (MP) & (1981) 127 ITR 27 (MO); Balchand Udairam Vs. State of Sikkim, (1989) 180 ITR 530, 553 (Sikkim); K.T. Thomas Vs. Ag ITO, (1990) 184 ITR 561, 565 (Ker.)]. In making a best judgment assessment the Assessing Officer does not possess absolutely arbitrary authority to assessee at any figure he likes and that although he is not bound by strict judicial principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s passed by the revenue authorities, I noticed that the first notice was given to the assessee in the month of December, 2020 which was complied with by the assessee, but thereafter there were long gap of almost 22 months when another notice on 3rd November, 2022 was issued for enablement of Window, which did not require any response neither there was any such option. Again, thereafter there was complete silence for around 19 months before issuing notices on 11.06.2024, 28.06.2024 and 09.07.2024 which shows that within a short span of time three notices were issued to the assessee but was not sufficient to collect all the documents and other required information for furnishing before Ld. CIT (A). In my considered view, the opportunity of hearing means opportunity of proper hearing and a reasonable time is to be granted to the respective party and even otherwise, the Ld. CIT (A) has passed an ex parte order and the principles laid down by the Hon'ble High Courts are that the lees between the parties is to be decided on merits. Therefore, without commenting anything on merits, I feel it proper and appropriate to restore the matter back to the file of ld. CIT (A) for afresh decision. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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