2022 (8) TMI 781 - AT - Income Tax

Tribunal rules in favor of assessee citing violations of natural justice & procedural fairness in penalty imposition.

M/s Accura Enterprise Pvt. Ltd. Versus Dy. CIT, Circel-1 (1) (1) Ahmedabad

M/s Accura Enterprise Pvt. Ltd. Versus Dy. CIT, Circel-1 (1) (1) Ahmedabad - TMI Issues:1. Violation of Principles of Natural Justice in passing an ex parte order.2. Levying penalty under section 271(1)(c) without recording mandatory satisfaction.3. Defect in show cause notice rendering penalty void ab initio.4. Confirmation of penalty under section 271(1)(c) of Rs. 6,34,716.5. Barred penalty order by limitation.6. Erroneous and excessive quantification of penalty.7. Lower authorities' failure to appreciate facts and submissions.Issue 1: Violation of Principles of Natural JusticeThe assessee contended that the learned CIT(A) erred in not granting a hearing opportunity before passing an ex parte order, violating the Principles of Natural Justice. The Tribunal noted the importance of providing a fair hearing and found the violation in the order, leading to a ground for appeal.Issue 2: Levying Penalty without Mandatory SatisfactionThe assessee challenged the action of the Assessing Officer (AO) in initiating and levying penalty under section 271(1)(c) without recording mandatory satisfaction. The Tribunal analyzed the legal requirement for satisfaction under the Act and considered the lack of it as a valid ground for appeal.Issue 3: Defect in Show Cause NoticeThe appeal raised concerns about the show cause notice not specifying the exact charge for the penalty under section 271(1)(c), leading to a defect rendering the penalty void ab initio. The Tribunal examined the legal implications of such a defect and its impact on the penalty imposition.Issue 4: Confirmation of PenaltyThe dispute centered on the confirmation of a penalty of Rs. 6,34,716 under section 271(1)(c) by the lower authorities. The Tribunal reviewed the grounds for the penalty imposition and assessed whether the confirmation was legally justified based on the facts and submissions presented.Issue 5: Barred Penalty OrderThe assessee argued that the penalty order was barred by limitation, questioning its jurisdiction and legality. The Tribunal scrutinized the timeline of the penalty imposition and assessed whether it was within the statutory limitations, considering the implications on the validity of the penalty.Issue 6: Erroneous Quantification of PenaltyThe appeal raised concerns about the erroneous and excessive quantification of the penalty. The Tribunal examined the calculations and justifications for the penalty amount to determine if there were errors in the quantification process, leading to a ground for appeal.Issue 7: Failure to Appreciate Facts and SubmissionsThe assessee contended that the lower authorities failed to properly appreciate the facts, submissions, and information provided, breaching the Principles of Natural Justice. The Tribunal reviewed the actions of the lower authorities and assessed whether there was a clear breach of law in their decision-making process.This detailed analysis of the judgment covers all the issues involved in the appeal before the Appellate Tribunal ITAT Ahmedabad.