2016 (11) TMI 438 - AT - Income Tax

Tribunal emphasizes procedural fairness in penalty appeal process under Income-tax Act

Sri Chellayan Davidsamraj, C/o Shri S. Sridhar, Advocate Versus The Income Tax Officer

The Tribunal remitted the issue back to the CIT(Appeals) in an appeal against a penalty under Section 271(1)(c) of the Income-tax Act, emphasizing the ... Penalty under Section 271(1)(c) - confirming the levy of penalty without due opportunity - Held that:- We are of the opinion that the Ld. CIT(Appeals) should give due opportunity to the assessee before confirming the penalty order. Hence, the issue is remitted back to the file of the Ld. CIT(Appeals) for giving adequate opportunity to the assessee and then pass an appropriate order. Issues:Appeal against penalty under Section 271(1)(c) of the Income-tax Act, 1961 for non-pursuing of the appeal.Analysis:The judgment pertains to an appeal against a penalty levied under Section 271(1)(c) of the Income-tax Act, 1961. The assessee, engaged in fabrication and erection of material handling systems, admitted turnover in a 'cash system of accounting' for the assessment year 2008-09. The Assessing Officer noted a variance between the total payment in TDS certificates and the gross receipt admitted by the assessee. The assessee claimed to follow a cash system of accounting, considering only actual receipts. However, the Assessing Officer disagreed, treating the total receipts from TDS certificates as turnover and initiating penalty proceedings under Section 271(1)(c) for furnishing inaccurate particulars of income and concealing income amounting to Rs. 27,95,029.The assessee appealed against the penalty order before the CIT(Appeals), who confirmed the penalty for non-pursuing of the appeal. Subsequently, the assessee approached the Tribunal challenging the CIT(Appeals)'s decision. The grounds of appeal raised various contentions, including the assertion that the penalty order was contrary to law and facts, lacked proper justification, and was unsustainable under the law. The assessee also argued that the CIT(Appeals) failed to provide adequate opportunity and dismissed the appeal without proper reasoning, violating principles of natural justice.Upon hearing both parties and examining the records, the Tribunal held that the CIT(Appeals) should have given the assessee a fair opportunity before confirming the penalty order. Consequently, the Tribunal remitted the issue back to the CIT(Appeals) for reconsideration after affording the assessee due opportunity. The appeal was allowed for statistical purposes, emphasizing the need for procedural fairness in penalty proceedings under Section 271(1)(c) of the Income-tax Act, 1961.In conclusion, the judgment underscores the importance of providing adequate opportunity to the assessee in penalty proceedings, ensuring procedural fairness and adherence to principles of natural justice. The Tribunal's decision to remit the issue back to the CIT(Appeals) highlights the significance of due process in tax matters, emphasizing the need for a thorough and just consideration of penalties under the Income-tax Act, 1961.