Mahidhara Projects Private Limited Vs DCIT (ITAT Hyderabad)
Summary: The ITAT Hyderabad set aside the orders of the Commissioner of Income Tax (Appeals) after finding that the assessee company was not provided a proper opportunity of being heard during the appellate proceedings. Although the assessee had specifically opted in Form 35 not to receive notices through email and had furnished an alternative address for service, the CIT(A) continued issuing notices by email, except for one notice received shortly before disposal of the appeal. The Tribunal held that the absence of valid service of notices deprived the assessee of an effective opportunity to contest various additions and disallowances, including development expenditure, employees’ PF/ESI contribution, disallowance under Section 40(a)(ia), and Section 14A. Accordingly, the Tribunal restored the quantum appeal to the CIT(A) for fresh adjudication after granting reasonable opportunity of hearing. Since the penalty under Section 270A was dependent on the quantum assessment, the Tribunal also restored the penalty appeal to the CIT(A) for disposal after deciding the quantum appeal.
Core Issue: Whether the order of the CIT(A) could be sustained when appellate notices were not served in the mode specifically opted by the assessee in Form No. 35, thereby denying a reasonable opportunity of hearing, and whether the connected penalty appeal under section 270A should also be restored.
