SHRI. VIKRAM KOTHARI,BANGALORE vs. INCOME-TAX OFFICER WARD-(3)(2)(1), BANGALORE

This appeal at the instance of the assessee is directed against order of CIT(A), dated 08.03.2023, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2018-19.

The assessee has raised 8 grounds of appeal. All the grounds relate to the solitary issue of imposing of penalty under section 271AAC of the Income Tax Act, 1961 (hereinafter called ‘the Act’), amounting to Rs.1,98,021/-. The brief facts of the case are as follows:

Subsequently, penalty proceedings were initiated and notice dated 17.05.2021 was issued to the assessee. The assessee filed objections to the show cause notice. However, the submissions made by the assessee were rejected and the AO imposed a penalty under section 271AAC(1) of the Act amounting to Rs.1,98,020/-.

Aggrieved by the order of the AO imposing the penalty, assessee filed appeal before the First Appellate Authority (FAA). Before the CIT(A), the assessee in response to the three notices issued, submitted that the penalty appeal may be kept in abeyance since the quantum assessment was pending adjudication before him. The assessee did not file a written submission in response to the three notices issued. Hence, the CIT(A) dismissed the appeal of the assessee by observing as under:

Aggrieved by the order of the CIT(A) confirming the penalty imposed under section 271AAC of the Act, assessee has filed the present appeal before the Tribunal. The learned AR submitted that, as regards the quantum assessment, the assessee has filed an appeal as the same is pending adjudication even as on today before the CIT(A). It was submitted that since the quantum assessment was pending, assessee had sought for adjourning the appeal as against the order imposing penalty. It was stated that the CIT(A), without considering the adjournment application and also in the absence of a written submission, has erred in confirming the penalty imposed under section 271AAC of the Act. Hence, it was prayed that the assessment may be restored to the file of the CIT(A) so that the penalty appeal can be taken up after a decision is taken in the appeal against the quantum assessment.

The learned DR supported the orders of the AO imposing penalty and CIT(A)’s order confirming the same.

We have heard the rival submissions and perused the material on record. The assessee, in response to the three notices issued, had sought for adjournment of the case by stating the quantum assessment is pending. The assessee has not filed any written submission. Therefore, in the interest of justice and equity, we are of the view that the matter needs to be examined afresh by the CIT(A) since there were no submissions submitted by the assessee before him. Accordingly, the matter is restored to the file of the CIT(A). The CIT(A) is directed to take a decision in the quantum assessment before a decision is rendered in the appeal as against the order imposing the penalty. The assessee is directed to co-operate with the CIT(A) and shall furnish the necessary evidences and written submissions in support of his case. It is ordered accordingly.

In the result, appeal of the assessee is allowed for statistical purposes.