Multiple Notices on a Single Date Do Not Equal Multiple Effective Hearings: Mumbai ITAT Sets Aside ₹43,04,674 Penalty Order in Pujya Sindhi Panchayat Trust Case

Background and Significance

A recurring question in appellate proceedings under the Income-tax Act, 1961 is whether the formal issuance of multiple notices satisfies the legal requirement of providing adequate opportunity of hearing to an assessee. The Mumbai Bench of the Income Tax Appellate Tribunal recently addressed this question in the context of a penalty appeal filed by Pujya Sindhi Panchayat Trust, where the first appellate authority — the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre — had upheld a penalty of ₹43,04,674 levied under Section 270A of the Act for alleged misreporting of income.

The ITAT did not examine the merits of the penalty. Instead, it focused entirely on whether the assessee had received a genuine and effective opportunity to present its case before the CIT(A), and concluded that the chronology of notices fell short of that standard.

Case Background: Assessment and Penalty

Pujya Sindhi Panchayat Trust filed its return of income for Assessment Year 2018-19, declaring a total income of ₹10,57,163. The Assessing Officer completed the assessment under Section 143(3) of the Income-tax Act, 1961 vide order dated 09/03/2021, determining the total income at ₹67,25,136 by making an addition of ₹56,67,973.

Following the completion of assessment, penalty proceedings were initiated under Section 270A of the Act on grounds of alleged misreporting of income. The Assessing Officer passed a penalty order dated 18/03/2025, levying a penalty of ₹43,04,674.

Aggrieved by the penalty, the trust preferred an appeal before the CIT(A), NFAC under Section 250 of the Income-tax Act, 1961. The CIT(A) dismissed the appeal vide order dated 28/10/2025, upholding the penalty in its entirety. The trust then approached the ITAT Mumbai, raising primarily the ground that it had been denied adequate and effective opportunity to be heard during the first appellate proceedings.

Note: The ITAT's order does not examine whether the underlying assessment addition was correctly made, whether the facts constituted misreporting within the meaning of Section 270A, or whether the quantum of penalty was justified. All of those questions remain open for determination by the CIT(A) on remand.

Preliminary Issue: Condonation of 36-Day Delay

Before the appeal could be heard on its merits, the Tribunal was required to address a preliminary objection. The trust had filed its appeal before the ITAT with a delay of 36 days beyond the prescribed period. A condonation petition was filed, accompanied by an affidavit explaining the circumstances that led to the delay. The trust's representative submitted that the delay was unintentional and did not arise from deliberate inaction, and that the trust stood to gain no advantage from filing the appeal late.

The Department's representative opposed condonation of the delay.

The Tribunal's Approach to Condonation

The Tribunal referred to the well-established principle laid down by the Supreme Court in Collector, Land Acquisition v. Mst. Katiji & Ors. reported in (1987) 167 ITR 471 (SC), which held that the expression "sufficient cause" must receive a liberal construction so as to advance the cause of substantial justice. The Supreme Court had further observed in that decision that an ordinary litigant does not ordinarily derive a benefit by filing an appeal belatedly, and that when substantial justice and technical considerations are set against each other, the former ought to prevail.

Applying these principles, and taking into account: