Facts of the Case

The assessee had not filed his return of income for the relevant assessment year. In response to notice issued under section 148 of the Income-tax Act, the assessee e-filed his return on 24.05.2021 declaring total income of ₹4,34,690.The Assessing Officer observed that the assessee had a turnover of ₹1,51,89,265 and had failed to get his accounts audited as required under section 44AB of the Income-tax Act. The assessee also failed to furnish the audit report. Consequently, a penalty of ₹75,950 was levied under section 271B of the Act. The assessment order was passed ex-parte.Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals).

 Issues Involved

Whether the Commissioner of Income Tax (Appeals) was justified in dismissing the assessee’s appeal ex-parte for non-prosecution and sustaining the penalty levied under section 271B without providing reasonable opportunity of being heard.

 Petitioner’s (Assessee’s) Arguments

The assessee did not appear before the Tribunal. However, from the record, it was evident that the assessee was not provided reasonable opportunity either at the assessment stage or during appellate proceedings before the CIT(A).

 Respondent’s (Revenue’s) Arguments

The Departmental Representative relied upon the orders passed by the Assessing Officer and the Commissioner of Income Tax (Appeals) and supported the levy of penalty under section 271B of the Income-tax Act.

Court Order / Findings

The Income Tax Appellate Tribunal noted that both the assessment order and the appellate order passed by the CIT(A) were ex-parte in nature. The Tribunal further observed that reasonable opportunity of being heard had not been provided to the assessee.

In view of the violation of principles of natural justice, the Tribunal set aside the impugned order of the Commissioner of Income Tax (Appeals) and restored the matter to the file of the CIT(A) with a direction to pass a de novo order in accordance with law after providing reasonable opportunity to the assessee.

The appeal was partly allowed for statistical purposes.

 Important Clarification

The Tribunal has not expressed any opinion on the merits of the penalty levied under section 271B for alleged non-compliance with section 44AB. The matter has been restored solely on the ground that both the assessment and appellate proceedings suffered from procedural infirmities due to ex-parte disposal and denial of reasonable opportunity.

 Link to download the order - https://www.mytaxexpert.co.in/uploads/1770627093_GANGAPRASADKESARWANIPRATAPGARHVS.INCOMETAXOFFICERPRATAPGARH.PRATAPGARH..pdf  

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