M/S. CELLCAST INTERACTIVE INDIA PVT. LTD.,DELHI vs. DCIT, NEW DELHI

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ITA 3492/DEL/2017Status: DisposedITAT Delhi13 January 2023AY 2013-145 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessee raised a new ground regarding the validity of the penalty notice not specifying the exact limb of Section 271(1)(c) before the Tribunal. In the interest of justice, the issue was remitted back to the CIT(A) for examination.

What were the facts?

The assessee revised its return of income, leading to additions for creditors and computer hire charges. Penalty proceedings under Section 271(1)(c) were initiated. The CIT(A) confirmed the penalty, finding no satisfactory explanation from the assessee.

What were the issues?

Whether the penalty notice under Section 274 was vague and invalid for not specifying the exact limb of Section 271(1)(c) under which the penalty was levied.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES “B” : DELHI

Before: SHRI SHAMIM YAHYA & MS ASTHA CHANDRA

For Respondent: Shri Gurpreet Shah Singh, Sr. DR
Hearing: 09.01.2023Pronounced: 13.01.2023

Date of Hearing : 09.01.2023 Date of Pronouncement : 13.01.2023 ORDER PER SHAMIM YAHYA, A.M.: This appeal filed by the assessee is directed against the Order of the Ld. CIT(A)-2, New Delhi, dated 31.03.2017 and pertains to A.Y. 2013-14.

2. The grounds of appeal

read as under:- “Invalid Penalty U/s 271(l)(c) of Rs. 6,58,098/-

1. That on the facts and in the circumstances of the case and in law, Id. CIT-A-2, New Delhi erred in confirming penalty amounting Rs. 6,58,098/- u/s 271(l)(c) without appreciating that Ld. AO has miserably failed to pinpoint the exact head/limb

2 ITA.No.3492/Del./2017 in which subject penalty is levied for want of which present penalty becomes invalid.

2. That on the facts and in the circumstances of the case and in law, Id. CIT-A-2, New Delhi erred in confirming penalty amounting Rs. 6,58,098/- u/s 271(J)(c) without appreciating that Ld. AO has issued vague and mechanical notice u/s 274 which makes present penalty invalid; 3. That on the facts and in the circumstances of the case and n law, Id. CIT-A- 2, New Delhi erred in confirming penalty amounting Rs. 6,58,098/- u/s 271(1)(c) without appreciating that Ld. AO has not mentioned exact limb in which penalty is levied in impugned penalty order; 4. That on the facts and in the circumstances of the case and in law, Id. CIT-A- 2, New Delhi erred in confirming penalty amounting to Rs. 6,58,098/- , without appreciating that only reason for making addition was difference in creditors, which could not be reconciled due to closure of operations by assesses, which non-reconciliation, and consequential addition in assessment cannot be sufficient for imposing penalty u/s 271 (l)(c).

5. That on the facts in the circumstances of the case and in law, ld.CIT(A)-2, New Delhi erred in confirming penalty amounting to Rs.6,58,098/- u/s 271(l)(c), without appreciating that even additions made in the quantum order as assumptive and presumptive basis has very weak foundation, in eyes of law as highlighted in our reply dated 09.12.2015 and 05.01.2017 respectively filed before AO and CITA. Prayer/ Relief Claimed 1. To delete the penalty levied of Rs. 6,58,098/-.

2.

Any other relief as deemed fit in circumstances of the case.

6. That the appellant craves leave to add add/alter any/all grounds of appeal before or at the time of hearing of the appeal.

3 ITA.No.3492/Del./2017

3.

Brief facts of the case leading to the levy of penalty in this case are that the assessee filed its return of income on 26.09.2013 with total brought forward losses of Rs. 54,87,16,226/- including unabsorbed depreciation. Later, the assessee revised its return of income on 20.02.2015 declaring income of Rs. 4,77,12,227/- with brought forward losses of Rs.38,97,06.040/- and unabsorbed depreciation of Rs.3,23.47,939/-. Assessment in the case of the assessee was completed u/s 143(3) of the Act on 30.10.2015 determining loss at Rs. 38,97,06,040/- and brought forward loss was restricted to Rs.4,98,41,995/- and unabsorbed depreciation to be carried forward Rs.3,23,47,939/-. There were two disallowances made in the assessment order i.e. (i) creditors amounting to Rs. 20,96,496/- and (ii) computer hire charges amounting to Rs.33,372/-. Simultaneously, penalty u/s 271(1)(c) of tire Act was initiated for concealing/furnishing inaccurate particulars of income.

4.

The assessee did not file any appeal before the ld.CIT(A) against the quantum addition. Upon assessee’s appeal, the ld.CIT(A) found that the fact that the assessee has not filed any appeal before the CIT(A) indicates that the assessee has accepted the addition in principle. The ld. CIT(A) proceeded to examine the penalty levied and found that no satisfactory explanation was submitted by the assessee regarding the concealment of income/furnishing of inaccurate particulars of income. Referring to several case laws from the 4 ITA.No.3492/Del./2017 higher courts, he proceeded to confirm the levy of penalty. Against this order, the assessee has filed appeal before us.

5.

We have heard the ld. DR and perused the record. Several notices have been issued to the assessee and the assessee has not responded. Hence we proceed to adjudicate the issue by hearing the ld. DR and perusing the record. We note that before us, the assessee has raised grounds challenging the jurisdiction for levy of penalty by pleading that the AO has failed to point out the exact head/limb under which the penalty is levied and has claimed that it made the penalty invalid. We find that the above ground has not been raised before any of the authorities below nor any evidence in the said notice, without ticking off the relevant limb, has been filed before us. In these circumstances, in the interest of justice, we remit the issue to the file of the ld.CIT(A). The ld.CIT(A) is directed to examine the assessee’s claim that the relevant limb in the penalty notice about the charge against the assessee was not specified. After examining the same and the factual veracity thereof, the ld.CIT(A) shall pass an order as per law. Needless to add, the assessee should be granted adequate opportunity of being heard.

5 ITA.No.3492/Del./2017

6.

In the result, this appeal filed by the assessee stands allowed for statistical purposes only. Order pronounced in the open court on 13.01.2023.

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