Pujya Sindhi Panchayat Trust Vs ITO (ITAT Mumbai)
Three Notices on One Day Do Not Become Three Effective Hearings: ₹43 Lakh Penalty Appeal Sent Back by Mumbai ITAT
Summary; When an appellate order says that an assessee was given “several opportunities”, the number of notices alone may not tell the full story. The dates of those notices and the time actually available to respond also matter. The Mumbai ITAT examined this distinction in the penalty appeal of Pujya Sindhi Panchayat Trust, where three notices bearing different DINs were issued on the same day, followed by a final opportunity one day before the CIT(A) passed the order.
The case concerned a penalty of ₹43,04,674 under section 270A for alleged misreporting of income. The Tribunal has not deleted the penalty. It has set aside the first appellate order and sent the appeal back to the CIT(A) so that the trust can have a reasonable and effective opportunity to present its case.
From Assessment Addition to Misreporting Penalty
The trust filed its return for AY 2018-19 declaring a total income of ₹10,57,163. The AO completed the assessment under section 143(3) on 9 March 2021, determining total income at ₹67,25,136 after making an addition of ₹56,67,973. Penalty proceedings under section 270A followed, and the AO passed an order on 18 March 2025 levying ₹43,04,674 on account of alleged misreporting of income.
The trust challenged the penalty before the CIT(A), NFAC. Its appeal was dismissed by order dated 28 October 2025, and the penalty was upheld. The trust then approached the Tribunal, principally contending that it had not received an adequate and effective opportunity to put forward its submissions and supporting material in the first appeal.
The Tribunal’s order does not describe the underlying assessment addition or examine why the AO classified the case as misreporting. Its decision turns on how the penalty appeal was heard.
A 36-Day Delay in Filing the Tribunal Appeal
Before taking up the appeal, the Tribunal had to deal with a 36-day delay in filing it. The trust submitted a condonation petition supported by an affidavit, explaining the circumstances of the late filing and stating that the delay was neither intentional nor the result of deliberate inaction. The Department opposed condonation.
The Tribunal referred to the Supreme Court’s decision in Collector, Land Acquisition v. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC) on the liberal construction of “sufficient cause” in the interest of substantial justice. Having considered the explanation, the relatively short delay and the absence of anything suggesting mala fides, it condoned the 36 days and admitted the appeal. This allowed the Tribunal to consider the trust’s grievance about the CIT(A) proceedings; it did not decide the penalty issue itself.
Were There Really “Several Opportunities”?
The trust pointed to the chronology of the appellate notices. It had sought an adjournment against the first hearing notice dated 16 July 2025, saying that it needed more time to prepare its case. Thereafter, three notices with different DINs were issued on 24 September 2025. A final opportunity was given on 27 October 2025, and the CIT(A) passed the order on 28 October 2025.
The CIT(A)’s order recorded that several opportunities had been provided. The trust argued that issuing three notices on the same date could not, in substance, be treated as three separate effective occasions to present its case. It said that its submissions and supporting documents could not be placed properly before the appellate authority.
The Tribunal considered the chronology along with the size of the penalty. It noted the three notices stated to have been issued on one day and the final opportunity immediately preceding the appellate order. In those circumstances, it held that the trust deserved one effective opportunity to present its case and supporting material before the CIT(A).
Appeal Restored to the CIT(A)
The ITAT set aside the CIT(A)’s order and remitted the issues for fresh adjudication in accordance with law. It directed the CIT(A) to grant a reasonable and effective opportunity of hearing and thereafter pass a speaking order.
The direction was accompanied by an obligation on the trust. The Tribunal required it to participate diligently, furnish the details and evidence called for, and avoid unnecessary adjournments. The appeal was thus allowed for statistical purposes: the penalty appeal will be decided again by the CIT(A), who remains free to reach a conclusion on the merits after hearing the trust.
Author’s Comments
The useful point in this order is the distinction between issuing notices and providing an effective hearing. Three notices carrying different DINs may be three documents, but when all are issued on the same date, their number alone does not establish that the assessee had three meaningful chances to prepare and respond. The timing of the final notice also mattered here: the CIT(A) passed the order the very next day.
The order should nevertheless be read within its limits. The Tribunal did not decide whether the assessment addition was correct, whether the facts amounted to misreporting under section 270A, or whether the penalty amount was justified. Those questions remain to be argued before the CIT(A). The trust has obtained an opportunity to present its case, and the Tribunal has made clear that it must now use that opportunity diligently.
Cases Discussed/Relied Upon
- Collector, Land Acquisition v. Mst. Katiji & Ors. (Supreme Court); (1987) 167 ITR 471 (SC) — Relied upon for liberal construction of “sufficient cause” to advance substantial justice while considering condonation of delay.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
Present penalty appeal is filed by the assessee against the order dated 28/10/2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [“Ld. CIT(A)”] u/s. 250 of the Income-tax Act, 1961 (“the Act”) for Assessment Year 2018-19, on following grounds of appeal:
“1. The impugned appellate order dated 28.10.2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre is invalid and unsustainable in law, as it has passed in violation of the Principles of natural Justice, without affording adequate and reasonable opportunity of being heard to the assessee.
2. The Ld. Commissioner of Income Tax (Appeals), NFAC has erred in upholding the penalty imposed u/s 270A made by the Ld. Assessing Officer.
3. The Ld. Commissioner of Income Tax (Appeals) NFAC, has erred on facts and has stated that the Appellant was provided several opportunities to present his case. Indeed there were 5 notices providing the opportunity by the Ld. CIT(A). However, this overlooks the fact that the Appellant has seeked adjournment for the first hearing notice dated 16.07.2025 citing more time for preparation. Later three notices were issued on the exact same date i.e 24.09.2025 each with different DIN no’s and a last opportunity was provided on 27.10.2025. If issuing 3 notices on the same day with different DIN constitutes several opportunities provided to the appellant. It is clearly unfair and injustice to the appellant.
4. The appellant craves leave to add, alter, amend or withdraw any of the above grounds of appeal at the time of hearing.”
2. At the outset, we note that the present appeal is filed by the assessee with a delay of 36 days. The assessee has filed a petition seeking condonation of delay supported by an affidavit. The assessee has explained the circumstances leading to the belated filing and has prayed that the delay, being unintentional and not attributable to any deliberate inaction, may be condoned in the interest of substantial justice. The Ld.AR submitted that the assessee did not stand to derive any benefit by filing the appeal belatedly and requested that the appeal be admitted for adjudication on merits. The Ld.DR opposed the condonation.
2.1 We have perused the condonation petition and the affidavit filed in support thereof. The Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji & Ors. reported in (1987) 167 ITR 471 (SC) has held that the expression “sufficient cause” is required to receive a liberal construction so as to advance substantial justice and that ordinarily a litigant does not stand to benefit by lodging an appeal belatedly. It was further observed that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. Considering the explanation furnished by the assessee in the petition and affidavit, the relatively short period of delay and there being nothing on record to suggest that the delay was deliberate or mala fide, we are satisfied that sufficient cause existed for not filing the appeal within the prescribed period.
Accordingly, the delay of 36 days is condoned and the appeal is admitted for adjudication.
Brief facts of the case are as under:-
Assessee is a Trust which filed its return of income for the year under consideration declaring total income of Rs.10,57,163/-. The assessment was completed by the Ld. AO u/s. 143(3) of the Act vide order dated 09/03/2021 determining the total income at Rs.67,25,136/- by making an addition of Rs.56,67,973/-. Consequent thereto, penalty proceedings u/s. 270A of the Act were initiated and the Ld.AO vide order dated 18/03/2025 levied penalty of Rs.43,04,674/- on account of alleged misreporting of income.
Aggrieved by the said penalty order, the assessee preferred appeal before the Ld. CIT(A).
The Ld.CIT(A) upheld the penalty.
Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before this Tribuanal.
5. Before us, the Ld. AR submitted that the assessee did not receive an adequate and effective opportunity to represent its case before the Ld. CIT(A). Referring to the chronology of notices, he submitted that against the first hearing notice dated 16/07/2025, the assessee had sought an adjournment for preparation of the case. Thereafter, three notices bearing different DINs were issued on the same date, i.e., 24/09/2025, and a final opportunity was granted on 27/10/2025. The impugned order was thereafter passed on 28/10/2025. It was therefore submitted that the assessee could not effectively place its submissions and supporting material before the Ld. CIT(A). The Ld. AR prayed that one more opportunity may be granted to the assessee and the issues may be restored to the Ld. CIT(A) for adjudication afresh.
5.1. The Ld. DR relied upon the impugned order.
We have perused the submissions advanced by both sides in light of the record placed before us.
6. From the chronology placed before us, we note that though the impugned order records grant of several opportunities, three notices are stated to have been issued on the same date, i.e., 24/09/2025, followed by a final opportunity on 27/10/2025, and the impugned order came to be passed immediately thereafter on 28/10/2025. Considering the facts and circumstances of the case, particularly the levy of penalty of Rs.43,04,674/- u/s. 270A of the Act, we are of the considered opinion that the assessee deserves one effective opportunity to place its case and supporting material before the Ld. CIT(A).
We, therefore, set aside the impugned order and remit the issues to the file of the Ld.CIT(A) for fresh adjudication in accordance with law, after granting reasonable and effective opportunity of being heard to the assessee. The assessee is also directed to diligently participate in the proceedings and furnish all requisite details/evidences as called for without seeking unnecessary adjournments. The Ld.CIT(A) shall thereafter decide the issues by way of a speaking order in accordance with law.
Accordingly, Ground Nos. 1 to 3 are allowed for statistical purposes and Ground No. 4, being general in nature, requires no separate adjudication.
In the result, the appeal filed by the assessee stands allowed for statistical purposes.
Order pronounced in the open court on 25-09-2026.
