2019 (5) TMI 1638 - AT - Income Tax

Appellate Tribunal grants assessee final chance to defend against penalty under IT Act

The Appellate Tribunal ITAT Delhi allowed the appeal filed by the assessee for statistical purposes, directing the CIT(A) to grant the assessee a final ... Levy of penalty u/s 271(1)(c) - reopening of assessment u/s 148 - dismissal of appeal for non-prosecution - HELD THAT:- It is an admitted fact that due to non-appearance, the CIT(A), relying on the decision of the Tribunal in the case of CIT vs. Multiplan India Ltd. [1991 (5) TMI 120 - ITAT DELHI-D], the decision of CIT vs. B.N. Bhattacharya [1979 (5) TMI 4 - SUPREME COURT] and various other decisions, dismissed the appeal for non-prosecution. However, she has not decided the appeal on merit. Considering the totality of the facts of the case and in the interest of justice we restore the issue to the file of the CIT(A) with a direction to grant one final opportunity to the assessee to substantiate its case and decide the issue as per fact and law. The assessee is also hereby directed to appear before the CIT(A) and explain its case failing which the CIT(A) is at liberty to pass appropriate order as per law. Thus hold and direct accordingly. The grounds raised by the assessee are allowed for statistical purposes. Issues:1. Levy of penalty under section 271(1)(c) of the IT Act.Detailed Analysis:The appeal before the Appellate Tribunal ITAT Delhi was against an ex parte order passed by the CIT(A)-32, New Delhi, related to the Assessment Year 2005-06. The sole issue raised by the assessee in the appeal was the levy of a penalty of Rs. 44,82,582 under section 271(1)(c) of the IT Act, which had been upheld by the CIT(A).The facts of the case revealed that the assessee had initially declared a total income of Rs. 3,24,055 in its return of income filed on 29th October 2005. Subsequently, based on information from the Investigation Wing regarding transactions with certain group companies/firms providing accommodation entries, the case was reopened under section 147. The Assessing Officer completed the assessment, making an addition of Rs. 1,22,50,000 to the total income. Penalty proceedings under section 271(1)(c) were initiated, and despite various explanations provided by the assessee, the penalty of Rs. 44,82,582 was levied. The CIT(A) dismissed the appeal for non-prosecution in an ex parte order due to the non-appearance of the assessee.Upon hearing the arguments from both sides, the Tribunal noted that the CIT(A) had dismissed the appeal for non-prosecution without deciding on the merits of the case. Citing relevant precedents, the Tribunal decided to restore the issue to the file of the CIT(A) and directed to grant the assessee one final opportunity to substantiate its case. The assessee was instructed to appear before the CIT(A) and explain its case, with a warning that failure to do so would result in an appropriate order being passed by the CIT(A). The Tribunal allowed the grounds raised by the assessee for statistical purposes and ultimately allowed the appeal for statistical purposes.In conclusion, the Appellate Tribunal ITAT Delhi allowed the appeal filed by the assessee for statistical purposes, emphasizing the importance of providing the assessee with a fair opportunity to present its case before the CIT(A) and have the issue decided on merit.