Facts of the Case

The assessee, Fast Conversion Marketing Solution Private Limited, filed its return of income for AY 2016-17 on 17.10.2016 declaring income of Rs. 1,24,49,670.

The assessment was completed under section 143(3) on 30.12.2018, wherein the Assessing Officer determined total income at Rs. 2,89,73,802.

During assessment proceedings, the Assessing Officer made an addition of Rs. 1,65,24,132 under section 68 on account of unexplained credits.

Consequently, penalty proceedings under section 271(1)(c) were initiated for concealment of income and furnishing inaccurate particulars.

Later, a penalty of Rs. 15,31,787 was imposed by the Assessing Officer through order dated 23.01.2022.

The assessee filed an appeal before the CIT(A) challenging the penalty order. However, the CIT(A) dismissed the appeal ex-parte, stating that despite several opportunities, the assessee failed to make submissions.

Issues Involved

  1. Whether the CIT(A) was justified in dismissing the appeal ex-parte without deciding the matter on merits.
  2. Whether the penalty under section 271(1)(c) imposed by the Assessing Officer could be sustained when the appellate authority did not adjudicate the matter on merits.
  3. Whether passing an ex-parte order without granting adequate opportunity of hearing violates the principles of natural justice.

Petitioner’s Arguments (Assessee)

  • The order passed by the CIT(A) is bad in law and void ab initio.
  • The appeal was dismissed ex-parte without providing proper opportunity of being heard, which violates the principles of natural justice.
  • The CIT(A) failed to adjudicate the matter on merits regarding the penalty imposed.
  • The assessee had made full disclosure and provided a bona fide explanation regarding the claim made.
  • Therefore, there was no concealment of income or furnishing of inaccurate particulars.
  • The penalty order passed under section 271(1)(c) and the notice issued under section 274 were challenged as invalid.

Respondent’s Arguments (Revenue)

  • The CIT(A) had granted several opportunities to the assessee during appellate proceedings.
  • Despite these opportunities, the assessee failed to file any submissions in support of its appeal.
  • Therefore, the CIT(A) was justified in confirming the penalty order passed by the Assessing Officer.

Court Order / Findings (ITAT)

  • The CIT(A) passed the order ex-parte without discussing the merits of the case.
  • The appellate authority is required to adjudicate the appeal on merits, even if the assessee does not appear.
  • The objective of law is to ensure substantive justice, and procedural rules should support the administration of justice. 

Important Clarification by ITAT

  • The impugned order of the CIT(A) is set aside.
  • The matter is restored to the file of the CIT(A) for fresh adjudication.
  • The CIT(A) must provide a reasonable opportunity of being heard to the assessee.
  • The appeal should be decided on merits in accordance with law.
  • The assessee must cooperate in proceedings and avoid unnecessary adjournments.


    Link to download the order -  https://itat.gov.in/public/files/upload/1735631807-W4dSk6-1-TO.pdf

    Disclaimer

    This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.