M/S. JAGRUTI COMPUTECH PVT LTD,MUMBAI V. I.T.O, WARD, 1(2)(1), MUMBAI

ITA 5752/MUM/2024

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M/s. Jagruti Computech Pvt. Ltd. appealed against the penalty levied by the AO under section 271(1)(c) of the Income Tax Act, 1961, for filing inaccurate particulars of income. The penalty was initially set at Rs. 11,53,973, which was 100% of the tax sought to be evaded on an income addition of Rs. 37,34,540. The assessee argued that the penalty was imposed without waiting for the decision on the quantum appeal and that the assessment and penalty orders were passed ex-parte during the COVID-19 pandemic, limiting their ability to comply effectively. The Tribunal acknowledged these procedural shortcomings and remanded the case for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470643 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SURENDRA MEENA; LD.
• Assessee Lawyers: H S RAHEJA; LD
• Keywords: Business income; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 147; 144; 143(3); 250; 143(1); 271(1)(c); 274

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “F”, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER AND MS. PADMAVATHY S, ACCOUNTANT MEMBER ITA No.5752/M/2024 Assessment Year: 2013-14 M/s. Jagruti Computech Pvt. Ltd., 202, Maker Bhavan, 3, 21, New Marine Lines, Churchgate, Mumbai Maharashtra – 400 020 PAN: AABCJ4436H Vs. National Faceless Appeal Centre (NFAC) Delhi 245-A, North Block, New Delhi – 110001 (Appellant) (Respondent) Present for: Assessee by : Shri H S Raheja, Ld. A.R. Revenue by : Shri Surendra Meena, Ld. Sr. D.R. Date of Hearing : 30 . 01 .2025 Date of Pronouncement : 24.02.2025 O R D E R Per : Narender Kumar Choudhry, Judicial Member: This appeal has been preferred by the Assessee against the order dated 18.09.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2013-14. ITA No.5752/M/2024 M/s. Jagruti Computech Pvt. Ltd. 2 2. In the instant case, the Assessee had declared its total income at Rs.8,52,840/- by filing its return of income on dated 12.09.2013 which was selected for scrutiny assessment u/s 143(3) of the Act and resulted into passing the assessment order dated 29.03.2022 u/s 147 r.w.s. 144 & 144B of the Act and making the addition of Rs.37,34,540/- (Rs.36,53,037/- + Rs.81,505/-) on account of disallowance of business loss and income from house property and interest income. 3. The Assessing Officer (AO) also initiated the penalty proceedings u/s 271(1)(c) of the Act for filing of inaccurate particulars of income and consequently issued the notice u/s 274 of the Act and vide ex-parte penalty order dated 23.09.2022 u/s 271(1)(c) of the Act, ultimately levied the penalty to the tune of Rs.11,53,973/- @ 100% of the tax sought to be evaded on the income of Rs.37,34,540/-. 4. The Assessee, being aggrieved, challenged the levy of penalty before the Ld. Commissioner, who vide impugned order affirmed the penalty levied by dismissing the appeal and holding as under: “6.18 In the present case, the appellant failed to offer any explanation for short admission of receipts to the extent of Rs 16,12,014/-, details of c/f business loss claimed before AO both during reassessment proceedings and also during penalty proceedings both of which are passed ex-parte, thus attracting provisions of Explanation 1 of section 271(1)(c). During appeal proceedings also appellant has not made any effort to provide details of carried forward loss, current year loss. Whatever details with regard to loss for different years mentioned in the ITA No.5752/M/2024 M/s. Jagruti Computech Pvt. Ltd. 3 return are actually noticed from returns of income filed for different years. Reason for not furnishing details of loss is obvious. The appellant do not want to make it clear that the company for the current year treated part of rent as business income which was earlier offered by appellant itself under the head 'Income from House property'. Further appellant do not want AO to notice that there was no business income in hands of appellant for assessment years 2011-12 (where 143(1) was done), and for assessment year 2012-13 (assessment completed in absence of complete information) and consequently, there is no business loss which could be carried forward to current year. Therefore, present case attracts provisions of Explanation 1 of section 271(1)(c) as appellant failed to offer Explanation before AO and whatever Explanation offered during appeal proceedings is not considered correct. The claim of appellant that disallowance of current year / carried forward loss is due to change of opinion is also not accepted as appellant company itself categorized rent amount in previous years as 'income from house property and there is no ambiguity in the issue that when there is no business income in hands of appellant, question of business loss do not arise. Hence claim of appellant is rejected. Consequently, I am of considered view that AO has rightly levied penalty u/s 271(1)(c) of IT Act to the extent of Rs.11,53,973/-, Hence, Grounds of appeal of appellant are Dismissed.” 5. The Assessee, being aggrieved, has challenged the decision of the Ld. Commissioner in confirming the penalty and at the outset submitted that the AO, without waiting for the decision in quantum appeal against the addition of Rs.37,34,542/- by the then Ld. CIT(A) has passed the penalty order and levied the penalty. Even otherwise, the order passed by the then Ld. CIT(A) in the quantum appeal, is an ex-parte order and the appeal of the Assessee has ITA No.5752/M/2024 M/s. Jagruti Computech Pvt. Ltd. 4 been dismissed in limine. The Assessee further submitted that even otherwise the assessment proceedings were carried out during Covid-19 period when entire nation was on hold, and therefore the Assessee, could not make effective compliance. 6. The Ld. D.R. though refuted the claim of the Assessee but not the factual aspects, such as carrying out of the assessment proceedings during the Covid-19 period and passing the assessment order and the penalty order by the AO as ex-parte. 7. Having heard the parties and perused the material available on record, we observe that the Assessee during the Covid-19 period in the assessment proceedings could not get proper opportunity to represent its case and therefore the issue involved qua levy of penalty also remained to be adjudicated in its right perspective and proper manner. Even otherwise, as demonstrated by the Assessee that order passed by the then Ld. CIT(A) in quantum appeal is also ex-parte and therefore as per Assessee there is every likelihood that the same would entail setting aside. Thus, considering the peculiar facts and circumstances in totality, for the just and proper decision of the case and substantial justice, we are inclined to remand the instant case qua levy of penalty to the file of the AO for decision afresh, suffice to say by affording reasonable opportunity of being heard to the Assessee. Thus, the case is remanded to the file of the AO accordingly. ITA No.5752/M/2024 M/s. Jagruti Computech Pvt. Ltd. 5 8. In the result, the appeal filed by the Assessee is allowed for statistical purposes. Order pronounced in the open court on 24.02.2025. Sd/- Sd/- (PADMAVATHY S) (NARENDER KUMAR CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai. "