ITAT imposes penalty on assessee who was lethargic and non-cooperative before the AO

The assessee is a Partnership Firm. The AO was constrained to complete the assessment to the best of his judgement u/s 144 of the Income Tax Act, since the assessee did not furnish the details called for by him. The Assessing officer has added the outstanding liabilities u/s 41(1) of the Act. Since the assessee did not furnish the details and evidences for the expenses claimed, the AO rejected the book results and estimated the income @ 4% of the turnover, which worked out to Rs.42,35,130/-. After giving deduction of income of Rs.13,38,003/- declared by the assessee, the AO made the addition of Rs.28,97,127/- to the total income returned by the assessee. The Ld CIT(A) confirmed both the additions. Aggrieved, the assessee has filed this appeal before the Tribunal.

The Ld A.R submitted that the assessee could not appear before the AO for the reasons beyond its control. However, the assessee furnished details relating to the creditors to prove that they are continuing creditors. The assessee also submitted that its accounts have been audited and hence there is no reason to reject the book results. However, these contentions did not find favour with the Ld CIT(A). The Ld A.R, accordingly, submitted that the assessee did not get enough opportunity to present its case before the tax authorities.

The Ld. D.R, on the contrary, submitted that the assessee was provided with sufficient opportunity by the AO, but it has filed to avail it. This aspect has been specifically noticed by Ld CIT(A) in paragraph 4.1 of his order. The details, if any, furnished before Ld CIT(A) were also not sufficient. Accordingly, he contended that the order passed by Ld CIT(A) does not call for any interference.

Tribunal Order:

5. I heard rival contentions and perused the record. I notice that the assessment order has been passed u/s 144 of the Act, meaning thereby, the assessee was not heard before passing of the assessment order. But, it was due to failure of the assessee to appear before the AO. I notice that the AO was constrained to make both the additions, since the assessee did not furnish the details. It is the submission of Ld A.R that both these additions are not called for, which can be explained if an opportunity is given to the assessee. Accordingly, I am of the view that, in the interest of natural justice, the assessee may be provided with one more opportunity. In fact, providing one more opportunity to the assessee would promote cause of justice and it will not cause any prejudice to the revenue. However, since the assessee was lethargic and non-cooperative before the AO, I am of the view that second opportunity may be given by imposing cost upon the assessee. Accordingly, I impose a cost of Rs.10,000/- (Rupees Ten Thousand) upon the assessee, which shall be paid to the credit of income tax department as other fees within one month from the date of receipt of order by the assessee.

6. Subject to the payment of above cost, I set aside the order passed by Ld CIT(A) on both the issues cited above and restore them to the file of the AO for examining them afresh. We also direct the assessee to co-operate with the assessing officer for expeditious completion of set aside proceedings. After affording adequate opportunity of being heard, the AO may take appropriate decision in accordance with law.