2020 (12) TMI 296 - AT - Income Tax

Penalty u/s 27IB - assessee has maintained proper books of account and accounts are also Audited by Chartered Accountant - HELD THAT - CIT(A) has not given any categorical finding on merit of the case and dismissed the appeal on the ground of non-prosecution of appeal. It is also observed that the CIT(A) did not give sufficient opportunity of hearing to the assessee. CIT(A) was not right in dismissing the appeal of the assessee without giving proper opportunity of hearing. We are remanding back the entire issue to the file of the CIT(A) to be decided on merit. Needless to say the assessee be given opportunity of hearing by following principles of natural justice. The appeal of the assessee is partly allowed for statistical purpose.

Summary

Issues involved:
Appeal against penalty order under Section 271B of the Income Tax Act, 1961 for Assessment Year 2009-10.

Detailed Analysis:

1. Notice Issued and Penalty Imposed under Section 271B:
The appellant challenged the notice issued under Section 271B and the penalty imposed as illegal, bad in law, and without jurisdiction. The appellant contended that the provisions of Section 271B were not applicable as proper books of account were maintained and audited by a Chartered Accountant. However, the CIT(A) dismissed the appeal without giving a categorical finding on the merits of the case, citing non-prosecution of the appeal. The ITAT observed that the CIT(A) did not provide sufficient opportunity of hearing to the assessee, leading to a decision to remand the issue back to the CIT(A) for a decision on merit. The appeal was partly allowed, emphasizing the need for the assessee to be given a proper opportunity of hearing following the principles of natural justice.

2. Failure to Consider Written Submission and Ex-Parte Order:
The appellant raised concerns about the CIT(A) not considering the written submission filed through email and passing the order in an ex-parte manner, which was deemed arbitrary and against the principles of natural justice. The ITAT noted this issue and remanded the case back to the CIT(A) for a decision on merit, emphasizing the importance of providing the assessee with a fair opportunity of hearing.

3. Non-Prosecution of Appeal and Lack of Opportunity of Hearing:
The appellant contended that the CIT(A) erred in not appreciating the facts and circumstances, especially regarding the maintenance of books of account and the audit conducted by a Chartered Accountant. The ITAT found that the CIT(A) dismissed the appeal on the grounds of non-prosecution without giving sufficient opportunity of hearing to the assessee. Consequently, the ITAT remanded the issue back to the CIT(A) for a decision on merit, stressing the necessity of providing the assessee with a fair hearing in accordance with the principles of natural justice.

4. Unjust and Arbitrary Penalty Imposition:
The appellant argued that the penalty imposed was unjust, arbitrary, and highly excessive. While the ITAT partly allowed the appeal for statistical purposes, the issue of penalty imposition was not specifically addressed in the judgment. The ITAT's decision to remand the case back to the CIT(A) for a decision on merit implied a reevaluation of the penalty imposition in light of the principles of natural justice and proper opportunity of hearing for the assessee.

In conclusion, the ITAT's judgment highlighted the importance of providing the assessee with a fair opportunity of hearing, especially in cases involving penalty imposition under the Income Tax Act, 1961. The remand of the case back to the CIT(A) for a decision on merit underscored the significance of upholding the principles of natural justice in tax proceedings.