Ex-parte penalty u/s 270A and best judgment u/s 144 orders set aside for fresh adjudication

ITAT Hyderabad set aside ex-parte orders of CIT(A) relating to penalty u/s 270A for AYs 2017-18 and 2018-19 and the best judgment assessment u/s 144 for AY 2018-19. The Tribunal held that dismissal of the assessee's appeals for non-prosecution, without addressing the plea of non-receipt of notices and the impact of deletions made in quantum proceedings, was unjustified. It directed CIT(A) to re-adjudicate all three matters afresh by passing reasoned, speaking orders after affording adequate opportunity of hearing. Appeals were allowed for statistical purposes.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the ex parte dismissal of the appeals by the first appellate authority, without dealing with the assessee's contentions regarding non-receipt of notices and merits of additions/penalties, was justified.

1.2 Whether, in the circumstances, the appellate orders relating to assessment under section 144 and penalties under section 270A required to be set aside and remanded for fresh adjudication.

2. ISSUE-WISE DETAILED ANALYSIS

2.1 Validity of ex parte dismissal of appeals by the first appellate authority

Interpretation and reasoning

2.1.1 The Tribunal noted that all three impugned appellate orders were passed ex parte and the appeals were dismissed for non-prosecution.

2.1.2 The Tribunal took note of the assessee's specific grievance that notices of hearing before the appellate authority were not received, and that no reasonable opportunity had been given.

2.1.3 It was further noted that the assessee had raised substantive grounds on merits, including: (i) that penalty under section 270A was confirmed despite deletion of the underlying addition in quantum proceedings for one assessment year, and (ii) that certain disallowances were made on an ad hoc basis or were of such nature that they did not fall within "under-reporting" or "misreporting" of income for purposes of section 270A.

2.1.4 The Tribunal held that, once such specific issues were raised, dismissal of the appeals ex parte without considering these aspects and without a speaking order dealing with them was not justified.

Conclusions

2.1.5 The ex parte dismissal of the appeals by the first appellate authority, solely for non-prosecution and without examining the assessee's contentions on notice, opportunity, and merits, was held to be unjustified.

2.2 Consequential setting aside and remand of appellate orders on assessment and penalty

Interpretation and reasoning

2.2.1 In view of the defects in the manner of disposal of the appeals, and considering the assessee's claims regarding deletion of additions in quantum proceedings and the nature of disallowances leading to penalties under section 270A, the Tribunal found that the matters required fresh consideration by the first appellate authority.

2.2.2 The Tribunal considered it appropriate that the first appellate authority should adjudicate afresh on all issues after affording due opportunity of hearing to the assessee and pass speaking orders.

Conclusions

2.2.3 The appellate orders arising from penalty orders under section 270A for assessment years 2017-18 and 2018-19, and from the assessment order under section 144 for assessment year 2018-19, were set aside.

2.2.4 All three matters were remanded to the file of the first appellate authority for fresh adjudication, with a direction to grant appropriate opportunity of hearing to the assessee and to pass reasoned (speaking) orders.

2.2.5 The appeals before the Tribunal were treated as allowed for statistical purposes.

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