Facts of the Case

The Tribunal adjudicated two interconnected appeals filed by the assessee for Assessment Year 2009-10 — one relating to the quantum addition and the other concerning penalty under Section 271(1)(c).

The Assessing Officer had passed an ex parte order dated 28.06.2016, citing non-compliance with notices issued under Sections 148 and 142(1) of the Income Tax Act, 1961. Through this order, an addition of ₹11,08,130 was made on account of cash deposits in the assessee’s bank account.

The assessee’s appeal before the Commissioner of Income Tax (Appeals), NFAC, was also decided against him, as he allegedly failed to avail five opportunities of hearing.

 Issues Involved

  1. Whether the ex parte addition of ₹11,08,130 on account of cash deposits was justified.
  2. Whether the assessee was denied adequate opportunity to present submissions before the authorities.
  3. Whether penalty under Section 271(1)(c) could survive when the quantum addition itself was under challenge.

 Petitioner’s Arguments (Assessee)

The Authorized Representative contended that the Assessing Officer passed an extremely brief and non-speaking order and that insufficient time was granted for responding to notices.

It was further argued that detailed written submissions running into ten pages had been filed before the First Appellate Authority but were not considered while passing the impugned order.

On these grounds, the assessee sought another opportunity to present the full facts of the case before the authorities.

 Respondent’s Arguments (Revenue)

The Departmental Representative submitted that the assessee failed to respond to notices issued under Section 148 as well as Section 142(1). It was also contended that there was no evidence on record demonstrating that any submissions had been filed before the CIT(A) that could warrant relief.

 Court Order / Findings (ITAT Allahabad)

After examining the record and rival submissions, the Tribunal observed that the assessee had not meaningfully complied with proceedings before the lower authorities. However, it also noted that the alleged submissions before the CIT(A), if filed, did not appear to have been considered.

In the interest of substantive justice, the Tribunal remanded the matter to the Assessing Officer for a fresh assessment after granting the assessee an opportunity of being heard.

Regarding the penalty appeal, the Tribunal held that since the quantum addition had been remanded for reconsideration, the penalty imposed under Section 271(1)(c) could not presently survive. Accordingly, the penalty was deleted, with liberty granted to the Assessing Officer to initiate fresh penalty proceedings depending on the outcome of the reassessment.

 Important Clarification

The quantum appeal was allowed for statistical purposes, meaning that no final adjudication on the merits of the addition was made. The deletion of penalty was technical and conditional; fresh penalty proceedings may be initiated if additions are sustained after reassessment.

Link to download the order -   

https://www.mytaxexpert.co.in/uploads/1771061053_CHANDRABALISINGHMIRZAPURVS.ITO31MIRZAPUR.pdf                                                        

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