Epic Enzymes Pharmaceuticals & Industrial Chemicals Ltd. v. ACIT-10(3), Mumbai
[Citation -2019-LL-0828-55]

Citation 2019-LL-0828-55
Appellant Name Epic Enzymes Pharmaceuticals & Industrial Chemicals Ltd.
Respondent Name ACIT-10(3), Mumbai
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 28/08/2019
Assessment Year 2009-10
Judgment View Judgment
Keyword Tags furnishing inaccurate particulars • principles of natural justice • reasonable opportunity • claim of expenditure • levy of penalty • non prosecution • ex-parte • cash payment
Bot Summary: The Ld.CIT(A) dismissed appeal filed by the assessee and upheld penalty levied u/s 271(1)(c) of the I.T.Act, 1961, on the ground that the facts of the case clearly indicates that the assessee had no explanation to offer for some of the expenditure and also was not in a position to substantiate the claim with material evidences, to prove the bonafide nature of the transactions. The Ld.AR for the assesee, submitted that the Ld.CIT(A) has dismissed appeal filed by the assessee, ex-parte for non appearance as on the dates fixed for hearing, but such non appearance before the AO is neither deliberate nor any intention to derive undue advantage. The assessee could not appear before the AO due to various reasons beyond his control, otherwise it was 4 ITA No.2973/Mum/2014 Epic Enzymes Pharmaceuticals Industrial Chemicals Ltd. ready with explanations to offer, in respect of penalty levied u/s 271(1)(c) of the I.T.Act, 1961 and therefore, the issue may be set aside to the file of the CIT(A) to give one more opportunity of hearing to the assessee. The Ld. DR on the other hand, strongly supporting order of the Ld.CIT(A) submitted that the conduct of the assessee clearly proves that it is non cooperative to the proceedings before the appellate commissioner, which is evident from the fact that the Ld.CIT(A) had given six opportunities of hearing to the assessee, for which no compliance has been filed. The Ld.CIT(A) had rightly dismissed appeal filed by the assessee and his order should be upheld. We further noted that although, the Ld.CIT(A) had dismissed appeal filed by the assessee ex-parte, but decided the issue of levy of penalty u/s 271(1)(c) on merit by discussing the issue, in light of facts brought out by the AO. But, fact remains that the Ld.CIT(A) has decided appeal behind the back of the assessee, without hearing 5 ITA No.2973/Mum/2014 Epic Enzymes Pharmaceuticals Industrial Chemicals Ltd. from the aggrieved party. Considering the facts and circumstances of this case and also to give reasonable opportunity of hearing to the assessee, we deem it appropriate to restore the appeal to file of the Ld.CIT(A) and direct him to decide the appeal on merits after affording an opportunity of hearing to the assessee.


IN INCOME TAX APPELLATE TRIBUNAL E, BENCH MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA No.2973/M um/2014 (Assessment Year 2009-10) Epic Enzymes Pharmaceuticals & Vs. ACIT-10(3) Industrial Chemicals Ltd. Room No.451, 4th Floor 514, Persepolis, Sector-7 Aaykar Bha wan Navi Mumbai- 400 703 M.K.Road Mumbai-400 020 PAN/GIR No.AAACE1137H Appellant) (Respondent) Assessee by V.M.Chavda Revenue by Vijay Kumar Soni Date of Hearing 08/08/2019 Date of Pronouncement 28/08/2019 ORDER PER G.MANJUNATHA (A.M) This appeal filed by assessee is directed against order of Commissioner of Income Tax (Appeals) 22, Mumbai dated 27/02/2014 and it pertains to Assessment Year 2009-10. 2. assessee has raised following grounds of appeal:- 1. Whether on facts and in circumstances of case and in law, Ld.CIT (A) has erred in confirming penalty imposed on Appellant under Section 271(l)(c) of Act, without appreciating fact that no tax was payable by Appellant for A.Y. 2009-10 relevant to PY 2008-09 inasmuch as assessment was completed u/s, 143(3) of Act by determining loss of Rs.1,24,78,505/- as against loss of Rs,l,71,28,808/-declared by Appellant {by virtue of Assessment Order dated 28.12.2011 issued by Respondent herein}; 2 ITA No.2973/Mum/2014 Epic Enzymes Pharmaceuticals & Industrial Chemicals Ltd. 2. Whether on facts and in circumstances of case and in law, Ld.C1T (A) has erred in passing impugned order ex parte without affording fair opportunity of hearing to Appellant herein, in breach of principles of natural justice, despite Appellant having placed on record fact of untimely demise of Chairman & Managing Director of Appellant Company; 3. Whether on facts and in circumstances of case and in law, Ld, CIT (A) has erred in confirming penalty imposed on Appellant under Section 271(l)(c) of Act, without appreciating that it is settled law that mere claim of expenditure in law, incorrect or otherwise, cannot tantamount to furnishing inaccurate particulars in manner contemplated in Section 271(1)(c) of Act; 4. Whether on facts and in circumstances of case and in law, Ld. CIT (A) ought to have appreciated that penal proceedings under Section 271(l)(c) of Act could riot have been initiated when, penal proceedings initiated on similar grounds under Section 271D and Section 271E relating to A,Y. 2009-10 have been dropped by Respondent herein by virtue of its Order dated 02.03.2012 5. Whether on facts and in circumstances of case and in law, Ld. CIT (A) has erred in confirming penalty imposed on Appellant under Section 271(l)(c) of Act, without appreciating that contrary documentary and oral evidence referred in Assessment Order dated 29.12.2011 issued by Respondent herein; 6. Appellant prays that impugned order of CIT (A) be quashed and set aside and consequent penalty imposed on Appellant under Section 271(l)(c) of Act, be deleted; 7. Appellant craves leave to alter or amend above grounds and/or add new ground, as may be deemed fit and necessary. 3. brief facts of case are that assessment in this case was completed u/s 143(3) of I.T.Act, 1961, determining total loss at Rs. 1,24,78,505/-, as against, loss declared at Rs. 1,71,28,808/- by making additions towards disallowances of certain payments u/s 40A(2)(b) and disallowances of cash payments u/s 40A(3) of I.T.Act, 1961. Thereafter, penalty proceedings u/s 3 ITA No.2973/Mum/2014 Epic Enzymes Pharmaceuticals & Industrial Chemicals Ltd. 271(1)(c) has been initiated and after considering relevant submission of assessee and also taken note of material available on record, levied penalty of Rs. 13,94,989/- under Explanation-1 to Section 271(1)(c) of I.T.Act, 1961. assessee carried mater in appeal before Ld.CIT(A). During course of appellate proceedings, Ld.CIT(A) had given six dates of hearing to assesee, as mentioned in his appellate order at para 2.2, for which, assessee neither appeared nor filed any details. Therefore, Ld.CIT(A) dismissed appeal filed by assessee and upheld penalty levied u/s 271(1)(c) of I.T.Act, 1961, on ground that facts of case clearly indicates that assessee had no explanation to offer for some of expenditure and also was not in position to substantiate claim with material evidences, to prove bonafide nature of transactions. Aggrieved by CIT(A) order, assessee is in appeal before us. 4. Ld.AR for assesee, submitted that Ld.CIT(A) has dismissed appeal filed by assessee, ex-parte for non appearance as on dates fixed for hearing, but such non appearance before AO is neither deliberate nor any intention to derive undue advantage. assessee could not appear before AO due to various reasons beyond his control, otherwise it was 4 ITA No.2973/Mum/2014 Epic Enzymes Pharmaceuticals & Industrial Chemicals Ltd. ready with explanations to offer, in respect of penalty levied u/s 271(1)(c) of I.T.Act, 1961 and therefore, issue may be set aside to file of CIT(A) to give one more opportunity of hearing to assessee. Ld. DR on other hand, strongly supporting order of Ld.CIT(A) submitted that conduct of assessee clearly proves that it is non cooperative to proceedings before appellate commissioner, which is evident from fact that Ld.CIT(A) had given six opportunities of hearing to assessee, for which no compliance has been filed. Therefore, Ld.CIT(A) had rightly dismissed appeal filed by assessee and his order should be upheld. 5. We have heard both parties and perused material available on record. We find that Ld.CIT(A) had dismissed appeal filed by assessee ex-parte for non prosecution by assessee, even though various notices were issued fixing case for hearing as narrated by Ld.CIT(A) in his appellate order at Para 2.2 on pages 2. We further noted that although, Ld.CIT(A) had dismissed appeal filed by assessee ex-parte, but decided issue of levy of penalty u/s 271(1)(c) on merit by discussing issue, in light of facts brought out by AO. But, fact remains that Ld.CIT(A) has decided appeal behind back of assessee, without hearing 5 ITA No.2973/Mum/2014 Epic Enzymes Pharmaceuticals & Industrial Chemicals Ltd. from aggrieved party. Further, no litigant would derive any benefit by not prosecuting its appeal filed before appellate authorities, rather it would cause inconvenience to aggrieved party, in case appeal is dismissed for non prosecution. Therefore, when party is not appear for hearing, there should be some compelling reasons, beyond control of assessee, which prevented from appearance before authorities to explain case. In this case, Ld.AR for assessee submitted that assessee could not appear before AO, due to reasons beyond its control. Therefore, considering facts and circumstances of this case and also to give reasonable opportunity of hearing to assessee, we deem it appropriate to restore appeal to file of Ld.CIT(A) and direct him to decide appeal on merits after affording opportunity of hearing to assessee. Needless to say, assessee shall appear before Ld.CIT(A) without seeking further adjournments. 6. In result, appeal filed by assessee is allowed for statistical purpose. Order pronounced in open court on this 28 /08/2019 6 ITA No.2973/Mum/2014 Epic Enzymes Pharmaceuticals & Industrial Chemicals Ltd. Sd/- Sd/- (SANDEEP GOSAIN) (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 28/08/2019 Thirumalesh Sr.PS Copy of Order forwarded to 1. Appellant 2. Respondent. 3. CIT(A), Mumbai. 4. CIT DR, ITAT, Mumbai 5. BY ORDER, 6. Guard file. (Asstt. Registrar) ITAT, Mumbai Epic Enzymes Pharmaceuticals & Industrial Chemicals Ltd. v. ACIT-10(3), Mumbai
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