Tribunal sets aside tax penalty due to lack of opportunity for hearing

The Tribunal set aside the quantum addition confirmed by the Commissioner of Income Tax (Appeals) due to the assessee's reasonable opportunity to be heard. Consequently, the penalty under section 271(1)(c) was also set aside as it was based on the additions in the assessment order that did not survive. Both appeals were allowed in favor of the assessee for statistical purposes.

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Issues:
1. Quantum addition confirmed by Commissioner of Income Tax (Appeals).
2. Penalty u/s. 271(1)(c) confirmed by Commissioner of Income Tax (Appeals).

Issue 1: Quantum addition confirmed by Commissioner of Income Tax (Appeals):
The case involved two appeals filed by the assessee against the exparte orders of Commissioner of Income Tax (Appeals)-6, Ahmedabad. The first appeal, ITA No. 3042/AHD/2013, challenged the quantum addition confirmed by the Commissioner of Income Tax (Appeals). The assessee, a company engaged in trading shares, filed its return of income for the relevant assessment year but failed to appear before the authorities during scrutiny assessment proceedings. The Assessing Officer made various additions to the income returned by the assessee, leading to an ex-parte assessment order. The assessee contended that the non-appearance was due to a change in the registered office address from Ahmedabad to Pune, and the directors were unavailable for various reasons. The Department argued that the assessee did not communicate the change of address to the Assessing Officer. The Tribunal, considering the circumstances and principles of natural justice, set aside the impugned order and directed the issues to be restored back to the Assessing Officer for denovo adjudication, granting the assessee a reasonable opportunity to be heard.

Issue 2: Penalty u/s. 271(1)(c) confirmed by Commissioner of Income Tax (Appeals):
The second appeal, ITA No. 3043/AHD/2013, challenged the penalty levied u/s. 271(1)(c) by the Commissioner of Income Tax (Appeals) on the additions made in the assessment order. Since the Tribunal set aside the additions in the quantum proceedings, the penalty levied u/s. 271(1)(c) did not survive. Consequently, the impugned order confirming the penalty was set aside, and the appeal of the assessee was allowed. In conclusion, the appeal in ITA No. 3042/AHD/2013 was allowed for statistical purposes, and ITA No. 3043/AHD/2013 was also allowed.

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