The Income Tax Appellate Tribunal (ITAT), Allahabad Bench, quashed a penalty under Section 271(1)(c) of the Income Tax Act, 1961, and remanded the quantum addition case back to the Assessing Officer (AO) for fresh consideration.
Chandra Bali Singh, appellant-assessee challenged the addition of ₹11,08,130, which was treated as unexplained cash deposits by the AO. The second appeal challenged the penalty imposed under Section 271(1)(c) on the same addition. The AO passed the assessment order on June 28, 2016, in an ex-parte manner, citing non-compliance with notices issued under Sections 148 and 142(1).
The assessee’s appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] was dismissed due to repeated non-appearance. Although the assessee claimed to have filed written submissions, the CIT(A) decided the case without considering them. Aggrieved by this, the assessee approached the ITAT.
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The Tribunal noted that the AO’s order was brief and lacked detailed reasoning. It also observed that the CIT(A) failed to examine the submissions purportedly filed by the assessee. In the interest of justice, the ITAT remanded the quantum addition matter to the AO for fresh adjudication, directing the AO to provide the assessee with an opportunity to present his case.
Regarding the penalty under Section 271(1)(c), the ITAT ruled that it could not be sustained as the quantum addition was being reconsidered.
Two member Bench Comprised of Subhash Malguria (Judicial Member) and Sanjay Aswathi (Accountant Member) l quashed the penalty but allowed the AO to initiate fresh proceedings if the addition was upheld in reassessment.
In Conclusion,the appeal is allowed.
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