ITO, WARD-1, BARDOLI vs. SHREE CHALTHAN VIBHAG KHAND UDHYOG SAHAKARI MANDLI LTD., SURAT

Assessee by Shri Akshay Modi, CA Revenue by ShriH.P.Meena, CIT-DR Date of hearing 09.12.2021 Date of pronouncement 09.12.2021 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by Revenue is directed against the order of ld. Commissioner of Income tax (Appeals)-1, Surat dated 27.11.2019 for assessment year (AY) 2013-14, which in turn arises from order of penalty levied by assessing officer under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ dated 30.03.2018. The Revenue has raised following grounds of appeal:- “1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the penalty of Rs.32,80,19,926/- levied u/s 271(1)(c) of the Act by the AO.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty levied u/s 271(1)(c) of the Act though the addition on the basis of which penalty proceedings were Shree Chalthan Vibhag Khand Udhyog Mandli Ltd. initiated in the assessment u/s 143(3) of the I.T Act has been confirmed by the Ld. CIT(A).

3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty levied u/s 271(1)(c) of the Act on the basis of the decision of Hon'ble ITAT, Surat against the order u/s 143(3) of the IT Act in this instant case and failing to appreciate the facts of this case being different from the case CIT vs. Tasgaon Taluka SSK Ltd., where the Hon'ble Supreme Court has set aside the order and remitted back to the file of AO.”

2. Brief facts of the case are that assessee is a co-operative society engaged in the business of manufacturing of sugar and sale of sugar & buy products generated while producing sugar. The Assessing Officer while passing the assessment order for assessment year 2013-14 made addition of Rs.106.15.63.160/- on account of alleged inflated purchases. The Assessing Officer made addition in the assessment after detail discussions. On appeal in quantum assessment, before Ld. CIT(A) the addition of said purchases was upheld. The Assessing Officer after receipt of order of Ld. CIT(A) in quantum assessment, levied penalty under section 271(1)(c) of the Act @ 100% of tax sought to be evaded. The Assessing Officer worked out the penalty of Rs.32.80 crores in his order dated 30.03.2018.On further appeal before Tribunal the penalty was deleted by Ld. CIT(A) by taking view that addition in the assessment has been set aside by Tribunal and matter be restored to the file of Assessing Officer. Therefore, penalty order would not survive and thereby deleted entire penalty. However, the Assessing Officer 2