Hirabai & Hormusji Jiwanivakil Model School Trust Vs ITO (Exemption) (ITAT Mumbai)
Ex Parte Dismissal Set Aside – Tribunal Sends 271(1)(b)Penalty Case Back to CIT(A)- Assessment Pending, Penalty Appeal Must Be Reheard – ITAT Rules in Favour of Trust
Assessee, a charitable trust running a school, filed NIL return for AY 2016-17. Its case was selected for scrutiny, but since it did not comply with several notices u/s 143(2) & 142(1), the assessment was completed u/s 144. Consequent penalty proceedings u/s 271(1)(b) were initiated and penalty of ₹40,000 was levied for four instances of non-compliance.
Before CIT(A), Trust argued that it had already appealed against the ex parte order u/s 144, hence the penalty should have been kept in abeyance. It also pointed out irregularities-penalty order dated 28.06.2019 was signed by one officer (Shri Sanjay Kumar, ITO), while demand notice u/s 156 was issued a day earlier on 27.06.2019 by another officer (Shri Prashant Singh, ITO). However, CIT(A) dismissed the appeal ex parte on 23.04.2025 citing non-compliance.
Before ITAT, Assessee submitted that non-compliance occurred due to negligence of its earlier AR. Later, it engaged a new CA and sought time before CIT(A) (via letter dated 19.04.2025) to file fresh statement of facts & grounds, but CIT(A) ignored the request & dismissed the appeal. It also contended that the irregularity between demand notice & penalty order made the levy bad in law. Reliance was placed on Reuters Asia Pacific vs DCIT [2023] 157 taxmann.com 705 (Mum-Trib).
