SHYAM LAL AGRAWAL, RAIGARH,RAIGARH V. JT. CIT, TDS, RAIPUR, RAIPUR

ITA 392/RPR/2025

AI Insights

The case involves Shyam Lal Agrawal, the appellant, contesting a penalty imposed under section 271C of the Income Tax Act, 1961, for non-deduction of TDS on payments made to various NBFCs. The penalty of Rs. 1,22,805 was initially upheld by the CIT(A) despite a reduction in the amount liable to TDS following a previous ITAT order. The appellant's appeal to the ITAT was initially delayed due to a misunderstanding related to the Vivad Se Vishwas Scheme, which was later rectified. The ITAT found that the CIT(A) had dismissed the appeal ex-parte without adequate opportunity for the appellant to present his case, leading to the decision to remand the case for a fresh hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712095 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2012-2013
• Other Referred Cases: Brajesh Singh Bhadoria Vs. Dy./ Asstt. Commissioner of Income Tax, Central Circle-2, Vijay Shrinivasrao Kulkarni Vs. Income-tax Appellate Tribunal, Delhi Transport Corporation vs. DTC Mazdoor Union, Commissioner of Income Tax Madras v. Chenniyappa Mudiliar
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASSESSEE GETTING REDRESSAL FROM TRIBUNAL EVEN; PRIYANKA PATEL
• Assessee Lawyers: S.R. RAO
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Reasonable cause; Bonafide belief; Principle of natural justice; TDS; Validity of assessment
• Section: 143(3)

Judgement Text

"आयकर अपीलीय अिधकरण, रायपुर Ɋायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR Įी पाथ[ सारथी चौधरȣ, Ɋाियक सद˟ एवं ŵी अŜण खोड़िपया, लेखा सद˟ क े समƗ । BEFORE SHRI PARTHA SARATHI CHAUDHURY, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं. / ITA No: 392/RPR/2025 (िनधाŊरण वषŊ Assessment Year: 2012-13) Shyam Lal Agrawal, Lal Tanki Road, Raigarh- 496001, C.G. v s Jt. Commissioner of Income Tax- TDS Range, New Central Revenue Building, Civil Lines, Raipur-492001, C.G. PAN: AFSPA9511K (अपीलाथŎ/Appellant) . . (ŮȑथŎ / Respondent) िनधाŊįरती की ओर से / Assessee by : Shri S. R. Rao, Adv. राजˢ की ओर से / Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई की तारीख / Date of Hearing : 23.07.2025 घोषणा की तारीख / Date of Pronouncement : 24.07.2025 आदेश / O R D E R Per Arun Khodpia, AM: The captioned appeal instituted by the assessee is directed against the order of the Commissioner of Income Tax (Appeal), NFAC, Delhi, [in short “Ld. CIT(A)”], passed under section 250 of the Income Tax Act, 1961 (in short “the Act”), dated 03.01.2025, for the Assessment Year 2012-13, which in turn arises from the penalty order u/s 271C of the Act, dated 31.03.2022, passed by Commissioner of Income Tax, TDS, Addl. CIT/JCIT TDS Range, Raipur, (in short “Ld. AO”). Printed from counselvise.com 2 ITA No.392/RPR/2025 Shyam Lal Agrawal, Raigarh vs. Jt. CIT, TDS, Raipur 2. The grounds of appeal raised by the assessee are as under: 1. In the facts and circumstances of the case and in law, the Ld. Assessing Officer has erred in imposing penalty of Rs.1,22,805/- u/s. 271C of the Income-tax Act, 1961 on the basis of assessment order dated 27/10/2014 which was restored by Hon'ble Income-tax Appellate Tribunal and fresh assessment order was made in set aside proceedings wherein no reference was made for penalty u/s. 271C of the Act. 2. In the facts and circumstances of the case and in law, the penalty imposed u/s. 271C of the Income-tax Act, 1961 on the basis of original assessment order is illegal and without jurisdiction. 3. In the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in confirming the penalty of 1,22,805/- imposed u/s. 271C of the Income Tax Act, 1961 without giving adequate opportunity and without considering the relief granted in the assessment order by Hon'ble Income Tax Appellate Tribunal pursuant to which the amount liable to TDS was reduced from Rs.11,92,282/- to Rs.1,10,610/- by Ld. Assessing Officer while giving effect to the order of the Hon'ble ITAT in ITA No. 111/RPR/2017 dated 10/05/2019. 4. The order of Ld. CIT (Appeals) is bad in law and on facts. 5. The appellant reserves the right to add, alter, amend, omit all or any of the grounds of appeal with permission of the Hon'ble appellate authority. 3. At the outset, it is noticed that the appeal filed by the assessee is delayed by 74 days, thus, barred by limitation. Regarding the said defect that the appeal is filed being delayed, assessee furnished an affidavit duly signed and notarized dated 27.06.2025, the contents of same are extracted as under: Printed from counselvise.com 3 ITA No.392/RPR/2025 Shyam Lal Agrawal, Raigarh vs. Jt. CIT, TDS, Raipur Printed from counselvise.com 4 ITA No.392/RPR/2025 Shyam Lal Agrawal, Raigarh vs. Jt. CIT, TDS, Raipur 4. On perusal of the aforesaid affidavit submitted by the assessee, which is reiterated by the Ld. AR of the assessee, stating the reason for delay that the assessee’s appeal was dismissed by the Ld. CIT(A) on ex- parte basis vide impugned order dated 03.01.2025, thereafter the assessee opted for Vivad Se Vishwas Scheme, 2024 (in short “VSVS-2024”), for dispute settlement of the penalty u/s 271C of the Act, and was awaiting for communication from the department. Later on, it was noticed that the application of assessee was rejected by the department on technical grounds that the form should have been filed using TAN instead of PAN. It was the submission that the assessee was under Bonafide belief that his application under VSVS, 2024 would be accepted, however, unfortunately Printed from counselvise.com 5 ITA No.392/RPR/2025 Shyam Lal Agrawal, Raigarh vs. Jt. CIT, TDS, Raipur the same was rejected on technical grounds and accordingly, the appeal could not be filed within the stipulated time limit before the ITAT. In terms of the aforesaid reason, it was the prayer by Ld. AR that the delay occurred only because of assessee’s declaration in VSVS, 2024 scheme, which was pending before the department, therefore, the reasons for delay are beyond the assessee’s control and accordingly, the condonation of delay may kindly be allowed. 5. Giving thoughtful consideration to the aforesaid submissions of the assessee justifying the reasons for the delay in filing of appeal, we are of the view that the delay was on account of sufficient cause beyond the control of assessee and accordingly, the delay of 74 days in the present case can be condoned. This issue is confronted to the Ld. Departmental Representative to which she did not objected, accordingly, the delay of 74 days has been condoned. 6. In this matter, the impugned penalty order u/s 271C was passed on 31.03.2022, with the levy of the penalty of Rs. 1,22,805/- on account of non- deduction of TDS u/s 194A on the payments made to various NBFCs. Printed from counselvise.com 6 ITA No.392/RPR/2025 Shyam Lal Agrawal, Raigarh vs. Jt. CIT, TDS, Raipur 7. Aggrieved with the aforesaid penalty imposed, the assessee preferred an appeal before the Ld. CIT(A), however, the same is dismissed on account of no response / compliance by the assessee. 8. Dissatisfied with the aforesaid order of Ld. CIT(A), the assessee preferred an appeal before us, which is under consideration in the present case. 9. At the outset, on perusal of the impugned order of Ld. CIT(A), it is noticed that the appeal of assessee before the First appellate authority has dismissed the appeal of assessee on ex-parte basis on account of asseessee’s failure to prove the reasonable cause due to which he was prevented to deduct tax in the payments made to specified persons covered under the scope of section 194A. It was the observations of Ld. CIT(A) that despite granting of opportunities that the assessee has not proved any reasonable cause for his failure to deduct. 10. Before us, it is submitted by the Ld. AR that during the first appellate proceedings, the order was passed on ex-parte basis, and the assessee was unable to substantiate its claim on account of adequate opportunities by the Ld. CIT(A). Further, it is submitted that the amount of penalty was calculated on the amount liable to TDS for Rs. 11, 92, 282/- which was later Printed from counselvise.com 7 ITA No.392/RPR/2025 Shyam Lal Agrawal, Raigarh vs. Jt. CIT, TDS, Raipur reduced to Rs. 1,10,610/- by the Hon’ble ITAT, in ITA No. 111/RPR/2017 dated 10.05.2019 and the appeal effect of same was also given by the Ld. AO, therefore, on this count also the penalty imposed on the assessee was erroneously confirmed by the Ld. CIT(A). 11. Per contra, Ld. Sr. DR vehemently supported the order of Ld. CIT(A). 12. We have considered the rival submissions and perused the material available on record. It is claimed by the assessee that the impugned order passed by Ld. CIT(A) was an ex-parte order, though such fact is not emanating from the order of Ld. CIT(A), however, certain other information like there was an order u/s 143(3) / 254 dated 02.05.2022 which is referred by the Ld. AO in 2nd para of the penalty order u/s 271C and there was deduction in the amount liable to TDS by the ITAT(referred to supra), which could not be brought to the notice of Ld. CIT(A) by the assessee thereby was unable to prove the reasonable cause for his failure before the First Appellate Authority. 13. In view of aforesaid facts of present case, since order passed by Ld. CIT(A) was an ex-parte order, therefore, the case of assessee deserves to be set aside to the file of Ld. CIT(A) for fresh adjudication, following the analogy drawn by us in the case of Brajesh Singh Bhadoria Vs. Dy./ Asstt. Printed from counselvise.com 8 ITA No.392/RPR/2025 Shyam Lal Agrawal, Raigarh vs. Jt. CIT, TDS, Raipur Commissioner of Income Tax, Central Circle-2, in IT(SS) No. 1 to 6, 8 & 9/RPR/2025 dated 20.03.2025, wherein our findings are as under: 7. We have considered the submissions of the parties herein and analyzed the facts and circumstances involved in all the captioned appeals. After careful perusal of the documents on record, we find that the assessee had assailed the legal ground as aforestated, however, the fact of the matter is that on perusal of the respective orders of the Ld. CIT(Appeals) for all the years before us, it is also evident from Para 3 that there has been no compliance by the assessee before the said authority and as such, an ex-parte order was passed for the concerned years in appeal. Admittedly, as per record, sufficient opportunities had been provided to the assesse, however, there was no compliance by the assessee. In effect, rights and liabilities of the parties herein are yet to be adjudicated substantially at the level of the first appellate authority. Though in the impugned orders, discussion has been done as per material available on record by the Ld. CIT(Appeals) but they are only Form 35, statement of facts, grounds of appeal and the assessment order. However, due to non- compliance by the assessee, there are no submissions, evidence and documents submitted for adjudication by the assessee before the Ld. CIT(Appeals). That as per Para 3 of the Ld. CIT(Appeals) order, there has been no compliance on the part of the assessee for submitting detailed explanations regarding the grounds of appeal for the years under consideration which clearly shows that the grounds of appeal raised before the first appellate authority has not been substantiated on merits through corroborative evidence /submissions. 8. That in such scenario we are of the considered view that the Income tax Act is within the ambit of welfare legislation which are completely different from that of the penal legislation, therefore, benefit of doubt whenever arises, Printed from counselvise.com 9 ITA No.392/RPR/2025 Shyam Lal Agrawal, Raigarh vs. Jt. CIT, TDS, Raipur it has to be interpreted in favour of the assessee tax payer within the parameters of law and facts. There may be circumstances beyond control of the assessee because of which, the assessee may not have been able to represent his case on the given dates of hearing before the Ld. CIT(Appeals). Though it is correct that there was no compliance from the side of the assessee, however, nothing is there on record which suggests any deliberate non- compliance or malafide conduct of the assessee. That further, if one final opportunity is provided to the assessee to represent his case before the first appellate authority, the position of the revenue will also not be jeopardized. 9. Recently, the Hon’ble High Court of Bombay in the case of Vijay Shrinivasrao Kulkarni Vs. Income-tax Appellate Tribunal (2025) 171 taxmann.com 696 (Bom.), dated 04.02.2025 observed that in the case the Assessing Officer had passed an ex-parte order and when the matter went on appeal before the Ld. CIT(Appeals)/NFAC, it had also dismissed the matter ex-parte due to non-compliance by the assessee’s authorized representative, when the matter came up before the ITAT, it had failed to address the infirmity regarding the fact that the assessee was not afforded proper opportunity of being heard and the matter was dismissed ex-parte by the Ld. CIT(Appeals)/NFAC which amounted to violation of principles of natural justice, and instead ITAT decided the case on merits, in such circumstances, the Hon’ble High Court of Bombay held that passing of an order on merits by the ITAT even when the impugned order was passed ex-parte amounts to violation of principles of natural justice and accordingly, the said matter was remanded to ITAT for passing a fresh order in accordance with law after hearing the parties. The legal principle as enshrined in the present judgment is crystal clear that the principles of natural justice i.e. the right to be heard is to be provided and accordingly, the matter had to be substantially Printed from counselvise.com 10 ITA No.392/RPR/2025 Shyam Lal Agrawal, Raigarh vs. Jt. CIT, TDS, Raipur adjudicated by the appellate authority. Therefore, if the impugned order of the Ld. CIT(Appeals)/NFAC is an ex-parte order, the only recourse in conformity with the aforesaid judicial pronouncement is to remand the matter back to the file of the Ld. CIT(Appeals)/NFAC for fresh adjudication in terms with the principles of natural justice providing one final opportunity to the assessee. 10. In the aforesaid case, the Hon’ble High Court of Bombay had referred to a judgment of the Hon’ble Supreme Court in the case of Delhi Transport Corporation vs. DTC Mazdoor Union AIR 1999 SC 564, wherein the Supreme Court inter-alia held that Article 14 guarantees a right of hearing to a person who is adversely affected by an administrative order. The principle of audi- alteram partem is a part of Article 14 of the Constitution of India. In light of such decision, the petitioner ought to have been granted an opportunity of being heard which, partakes the characteristic of the fundamental right under Article 14 of the Constitution of India. 11. The Hon’ble High Court of Bombay in the aforesaid case had referred to a decision of the Hon’ble Supreme Court in the case of Commissioner of Income Tax Madras v. Chenniyappa Mudiliar 1969 1 SCC 591, wherein the Supreme Court in interpreting the section 33(4) of the Income Tax Act, 1922 has held that the appellate tribunal was bound to give a proper decision on question of fact as well as law, which can only be done if the appeal is disposed off on merits and not dismissed owing to the absence of the appellant. Reverting to the facts of the present case the grounds of appeal were simply filed before the Ld.CIT(Appeals) they were not substantiated or corroborated through submissions and filing of documentary evidences since the assessee had not complied before the Ld.CIT(Appeals) on the dates of hearing. Therefore, as per framework of the Act there must be adjudication on merits Printed from counselvise.com 11 ITA No.392/RPR/2025 Shyam Lal Agrawal, Raigarh vs. Jt. CIT, TDS, Raipur by the first appellate authority and one final opportunity be provided to the assessee to represent his matter on merits in the interest of natural justice. 12. There may even be a situation where the Ld. Counsel for the assessee may assail a legal ground before the Tribunal following the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC) with a contention that irrespective of the order of the Ld. CIT(Appeals) being ex-parte, the Tribunal may decide the legal issue that has been raised by the Ld. Counsel. In our view, the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (supra) provides that any legal issue which goes to the root of the matter and is established through legal principles, the assessee can take up and raise such legal issue at any appellate forum irrespective of whether the assessee had raised such legal issue at the sub- ordinate level or not, however, it always depends on facts and circumstances of each case whether the Tribunal would decide the legal ground or in a case where the question is of natural justice and ex-parte order by the Ld. CIT(Appeals) the Tribunal would remand it back to Ld. CIT(Appeals) providing final opportunity to a bonafide assessee. The Tribunal as the highest fact finding authority must be certain enough that the impugned order before it has been passed on merits and is a speaking order where the assessee has also complied during the process of litigation. In case, where the order of the Ld. CIT(Appeals) itself is ex-parte and some legal ground is raised and if the Tribunal decides such legal ground where in fact principles of natural justice is left unanswered due to the fact that the impugned order before the Tribunal is ex-parte and there was no compliance by the assessee in such scenario the Tribunal would also be usurping the power of the Ld. CIT(Appeals) which is also a statutory authority as per the Act. This is due to the reason that as per Printed from counselvise.com 12 ITA No.392/RPR/2025 Shyam Lal Agrawal, Raigarh vs. Jt. CIT, TDS, Raipur framework of the Act, Ld. CIT(Appeals) is the first appellate authority where an appeal by assessee it would be substantially decided through a speaking order by the Ld. CIT(Appeals). When this part is over and either party is aggrieved second appeal lies before the ITAT. Now if for every ex-parte order passed by the Ld. CIT(Appeals), of course due to non-compliance by the assessee, if the Tribunal adjudicates a legal ground, for instance validity of assessment or reassessment order and answers it in favour of the assessee then it would create an easy route for assessee getting redressal from Tribunal even without bothering to comply with hearing notices before the Ld. CIT(Appeals). This would dismantle the structure of the Act which is definitely not the intention of the legislature. Here in this situation, where the benefit of doubt is given to the assessee since he had not complied with the hearing notices before the Ld. CIT(Appeals) which resulted in passing of an ex-parte order by the Ld. CIT(Appeals), in such scenario, as per the scheme of the Act and following the principles of natural justice, the only course of action is to remand the matter back to the file of the Ld. CIT(Appeals) for adjudication on merits providing one final opportunity to the assessee. 13. In view thereof, we set aside the respective orders of the Ld. CIT(Appeals) for all the years and remand the same to their file for denovo adjudication on merits. At the same time, we direct the assessee that this being the final opportunity, there must be compliance on merits before the first appellate authority. Needless to say, the Ld. CIT(Appeals) shall provide reasonable opportunity of being heard to the assessee and pass an order in terms of Section 250(4) and (6) of the Act within three months from receipt of this order. Printed from counselvise.com 13 ITA No.392/RPR/2025 Shyam Lal Agrawal, Raigarh vs. Jt. CIT, TDS, Raipur 14. In view of aforesaid facts and circumstances, respectfully following the aforesaid decision in the case of Brajesh Singh Bhadoria (supra), without dealing with the ground of appeal raised by the assessee on its merits, we find it appropriate to provide one last and final opportunity to the assessee to represent its case before the First Appellate Authority, accordingly, the matter is restored back to the files of Ld. CIT(A) for fresh adjudication within a period of 3 months from the receipt of this order. 15. Needless to say, the assessee shall be afforded with a reasonable opportunity of being heard in the set aside appellate proceedings. The assessee is also directed to cooperate and assist proactively in the set aside proceedings and furnish all the necessary information required for adjudication, failing which no further opportunities shall be provided, and the Ld. CIT (A) would be at liberty to decide the case in accordance with the mandate of law. 16. Resultantly, the appeal of the assessee in ITA No. 392/RPR/2025 is allowed for statistical purposes. Order pronounced in the open court on 24/07/2025. Sd/- (PARTHA SARATHI CHAUDHURY) Sd/- (ARUN KHODPIA) Ɋाियक सद˟ / JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER रायपुर / Raipur; िदनांक Dated 24/07/2025 Vaibhav Shrivastav Printed from counselvise.com 14 ITA No.392/RPR/2025 Shyam Lal Agrawal, Raigarh vs. Jt. CIT, TDS, Raipur आदेशकी Ůितिलिप अŤेिषत / Copy of the Order forwarded to : आदेशानुसार/ BY ORDER, (Senior Private Secretary) आयकर अपीलीय अिधकरण, रायपुर / ITAT, Raipur 1. अपीलाथŎ/ The Appellant- Shyam Lal Agrawal, Raigarh 2. ŮȑथŎ/ The Respondent- Jt. CIT, TDS, Raipur 3. The Pr. CIT, Raipur (C.G.) 4. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 5. गाडŊ फाईल / Guard file. // सȑािपत Ůित True copy // Printed from counselvise.com "