BINA SILK MILLS,MUMBAI vs. ITO 23(2)(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI S RIFAUR RAHMAN, AM AND MS. KAVITHA RAJAGOPAL, JM ITA No.705/Mum/2023 (Assessment Year: 2006-07)

Bina Silk Mills ITO 23(2)(1) 1st Floor, Behind Manisha Heights, Mumbai Vs. Balrajeshwar Road, Mulund (W), Mumbai-400 080 PAN/GIR No. AABFB 8748 B (Appellant) : (Respondent)

Assessee by : Shri Satish R. Mody Revenue by : Shri Chetan M Kacha

Date of Hearing : 08.05.2023 Date of Pronouncement : 10.05.2023

O R D E R Per Kavitha Rajagopal, J M:

This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless Appeal Centre (‘NFAC’ for short) u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2006-07.

2 ITA No. 705/Mum/2023 (A.Y. 2006-07) Bina Silk Mills vs. ITO assessment order was passed u/s. 143(3) r.w.s. 147 of the Act where the A.O. making the

following additions/disallowances determined the total income at Rs.94,06,384/-:

The A.O. also initiated the penalty proceedings u/s. 271(1)(c) of the Act and vide order

dated 26.03.2012 levied penalty of Rs.26,27,628/- u/s. 271(1)(c) of the Act.

u/s. 271(1)(c) of the Act.

the reason that the assessee has not complied with the notices and has thereby failed to

substantiate its stand before the first appellate authority.

CIT(A).

contended that the Tribunal in ITA No. 1836/Mum/2011 vide order dated 08.07.2015 had

remanded the mater pertaining to the quantum appeal to the file of the A.O. for de nova

adjudication for the reason that the assessee was unable to present its case before the ld.

CIT(A) owing to the financial crisis faced by the assessee where the ld. CIT(A) in this

case had passed an ex parte order. The ld. AR further contended that since the quantum

appeal has been remanded back to the A.O. for de nova adjudication, the penalty levied

on the said addition should also be deleted. The ld. AR relied on the decision of the co-

3 ITA No. 705/Mum/2023 (A.Y. 2006-07) Bina Silk Mills vs. ITO ordinate bench in the case of ITO vs. Shri Vijay Ajmera (in ITA No. 3549/Mum/2010

vide order dated 22.07.2011) in which case the ld. CIT(A) has deleted the penalty for the

reason that the assessment order itself was set aside by without getting into the merits of

the penalty order. The ld. AR further stated that the co-ordinate bench in the above

mentioned case has dismissed the appeal filed by the Revenue challenging the impugned

order of the ld. CIT(A). The ld. AR prayed that the penalty in the assessee’s case should

also be deleted on the same ground.

the other hand, controverted the submission of the ld. AR and relied on the decision of

the lower authorities.

record. It is evident that the A.O. had made additions/disallowances on unsecured loan

credits u/s. 68 of the Act, disallowance u/s. 41(1) of the Act and short term capital gain

and determined the income of the assessee at Rs.94,06,384/-. The assessee challenged the

assessment order before the ld. CIT(A) who confirmed the addition made by the A.O. on

the ground that the assessee has failed to substantiate its claim. The Tribunal in appeal

filed by the assessee had set aside the ex parte order passed by the ld. CIT(A) and

remanded the issue of addition/disallowances to the A.O. The assessee parallelly was in

appeal against the order of the penalty levied u/s. 271(1)(c) of the Act. Even in the

penalty proceeding, the assessee remained ex parte before the ld. CIT(A) who then

confirmed the penalty levied by the A.O. On considering the tribunal’s decision in Shri

Vijay Ajmera (supra) upon by the ld. AR, it is observed that the ld. CIT(A) in this case

4 ITA No. 705/Mum/2023 (A.Y. 2006-07) Bina Silk Mills vs. ITO had cancelled the penalty order passed u/s. 271(1)(c) of the Act on the ground that the

assessment order was set aside by the Tribunal to the A.O. and on an appeal preferred by

the Revenue challenging the ld. CIT(A)’s order cancelling the penalty, the Tribunal

observed that no interference was warranted on the ld. CIT(A)’s order for the reason that

since the assessment order was remanded back to the file of the A.O. there was no

assessment order alive and, hence, consequent penalty could not arise. However, the

Tribunal concluded that the A.O. is at liberty to initiate the fresh penalty proceedings

after completion of the de nova assessment order. In the present case in hand, the facts

are slightly distinguishable where the ld. CIT(A) has confirmed the penalty levied by the

A.O. by way of an ex parte order. The Tribunal in the assessee’s case for the impugned

year has set aside the assessment order for de nova adjudication before the ld. A.O. vide

its order dated 08.07.2015. The ld. AR for the assessee made a submission that the status

of the assessment proceeding is not known, as the assessment order has not been passed

till date. The ld. DR when confronted was also not aware of the status of the assessment

proceeding subsequent to the order of the ITAT remanding the assessment order to the

A.O. Since the assessment order has been remitted back to the file of the A.O., we find no

merit in deciding the penalty order levied consequent to the impugned assessment order.

On considering the ld. AR’s submission that the penalty order has to be deleted for the

reason that the assessment order was set aside to the A.O. does not persuade us to do so.

Though there are a plethora of cases by the Hon'ble Apex Court and the Hon'ble High

Court’s which held that if the assessment order is finally set aside or cancelled then the

concerned penalty order does not stand of its own, the present case in hand will not fall

under that category for the fact that the assessment order has not attained ‘finality’ in this

5 ITA No. 705/Mum/2023 (A.Y. 2006-07) Bina Silk Mills vs. ITO case. In our considered view, this penalty order shall also be remanded back to the file of

the A.O. for de nova assessment of penalty in accordance with the law and the A.O. is

directed to decide the issue of penalty afresh as to whether the penalty is to be leviable in

the facts and circumstances of the present case.

Order pronounced in the open court on 10.05.2023.

Sd/- Sd/-

(S Rifaur Rahman) (Kavitha Rajagopal) Accountant Member Judicial Member Mumbai; Dated : 10.05.2023 Roshani, Sr. PS

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT - concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai