ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, TIRUPATI vs. PRAKASH KUMAR DESAI, TIRUPATI

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ITA 755/HYD/2020Status: DisposedITAT Hyderabad03 December 2021AY 2011-123 pages
AI SummaryRemanded

What did the Tribunal hold?

The tribunal held that a penalty under Section 271(1)(c) cannot stand on protective additions alone until the substantive assessment is finalized. The matter was restored to the Assessing Officer for fresh examination.

What were the facts?

The Assessing Officer imposed a penalty under Section 271(1)(c) based on protective additions. The CIT(A) reversed this penalty, relying on a High Court decision requiring specific mention of concealment or inaccurate particulars. The tribunal noted that the final status of the substantive assessment was unclear.

What were the issues?

The primary issue was whether a penalty under Section 271(1)(c) could be levied on protective additions without finality of the substantive assessment. Another issue was the requirement for the Assessing Officer to specify whether the penalty was for concealment or inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

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Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad

Before: Shri A. Mohan Alankamony & Shri S.S. Godara

Hearing: 06/12/2021Pronounced: 07/12/2021

O R D E R Per S. S. Godara, J.M. This assessee’s appeal for A.Y 2011-12 arises from the Commissioner of Income Tax (Appeals) – 3, Visakhapatnam’s order dated 07.10.2020 in case No.21/2019-20/CIT(A)-3/VSP/2020-21 involving proceedings under section 271(1)(c) of Income Tax Act, 1961 (in short, “the Act”).

Heard both the parties. Case file perused.

2.

Coming to the Revenue’s sole substantive grievance that the CTI(A) has erred in law and on facts in reversing the Assessing Officer’s action imposing section 271(1)(c) penalty of Rs.1,51,45,071/- by placing reliance on hon’ble jurisdictional high court’s decision in PCIT Vs. Baisetty Revathi (2017) 398 ITR 88 (AP HC) that it is very much imperative for the Assessing Officer to strike off the specific limb as to whether the concerned assessee had concealed the particulars of his income or furnished inaccurate particulars of such as income, we find with the able assistance of both the parties and from perusal of the corresponding assessment order dated 19.03.2013 that the assessment in question involving the addition(s) in issue; had been made on “protective” base only.

3.

We sought to know the final status of the corresponding substantive assessment before adverting to the impugned issue of correctness of section 271(1)(c) penalty on merits. Both the parties fail to indicate the necessary factual position in this regard. 4. Faced with this situation, we prima facie of the opinion that the impugned penalty pertaining to various protective additions has no leg to stand as of now till the finality of the substantive assessment is ascertained. We accordingly restore the Revenue’s instant substantive grounds back to the Assessing Officer to examine the foregoing clinching issue afresh. It is made clear that the assessee shall be very much at liberty to raise all factual as well as legal pleas in consequential proceedings as per law. 5. This Revenue’s appeal is allowed for statistical purposes in above terms.

Order pronounced in the Open Court on 7th December, 2021.

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