VIJAYA GANAPATHY,CHENNAI vs. ITO, CHE-C(115)(1), CHENNAI

This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi, dated 12.01.2023 relevant to the assessment year 2012-13 passed under section 271(1)(c) of the Income Tax Act, 1961 [“Act” in short].

Brief facts of the case are that the assessee filed the return of income for the assessment year 2012-13 on 31.07.2012 declaring total income of ₹. 14,57,760/-. The return of income was initially accepted under section 143(1) of the Act on 08.02.2013 and later subjected to a rectification proceedings under section 154 of the Act dated 18.06.2013 at the instance of the assessee. Subsequently, the assessment was reopened by issuing notice under section 148 of the Act dated 28.02.2019 adopting the information of the amount received from M/s. Apollo Hospitals by the assessee, which was quantified at ₹.11,17,200/-. According to the information, the assessee was consulted by the 1596 out patients at the rate of ₹.700/- per patient which aggregated to ₹.11,17,200/- leading to the presumption of escapement of taxable income. In response to the reopening notice, the assessee filed the return of income on 04.03.2019 adopting the declared income already forming part of the original return of income filed at ₹.14,57,760/-. Notice under section 143(2) of the Act was issued on 09.08.2019 and the reasons for reopening were furnished to the assessee. Subsequently, notice under section 142(1) of the Act was sent to the assessee calling for various details. In response to the notice, the assessee has submitted copies of bank statements before the Assessing Officer, but did not submit any material as per Rule 6F. Therefore, a show-cause notice was issued to the assessee on 15.11.2019 and 10.12.2019 detailing as to why an amount of ₹.11,17,200/- should not be added to the business income of the assessee. In response to the show-cause notice, the assessee has submitted that patients with follow up visits within 6 weeks are not charged. As per Rule 6F, the assessee was mandated to maintain a detailed record of the patients seen and consulted and in the absence of any material being produced in adherence to Rule 6F, the gross receipts figure shown by the assessee in the income tax return comes under question. In view of the provisions of section 145(3) of the Act, the Assessing Officer proceeded to conclude best judgement assessment under section 144 of the Act and assessed total income of the assessee at ₹.24,26,800/- and completed the assessment under section 144 r.w.s. 145(3) r.w.s. 147 of the Act dated 16.12.2019. On appeal, the ld. CIT(A) confirmed the addition and dismissed the appeal of the assessee.

Thereafter, the Assessing Officer proceeded to initiate penalty proceedings under section 271(1)(c) of the Act and issued show cause notice dated 19.12.2019. After considering the submissions of the assessee, the Assessing Officer levied penalty under section 271(1)(c) of the Act of ₹.2,99,431/-.

On being aggrieved against levy of penalty, the assessee carried the matter in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the appeal filed by the assessee against the confirmation of quantum addition has been remitted back to the file of the ld. CIT(A) and the quantum addition has not attained its finality, the penalty levied under section 271(1)(c) of the Act is liable to be deleted.

On the other hand, the ld. DR has submitted that since the appeal against the quantum addition has been remitted back to the file of the ld. CIT(A), the penalty matter may also be remitted back to the file of the ld. CIT(A) for fresh consideration.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, the appeal against the confirmation of quantum addition has been remitted back to the file of the ld. CIT(A) for denovo adjudication vide order in dated 24.03.2022. Admittedly, the quantum addition made by the Assessing Officer has not attained its finality. Since the Assessing Officer has initiated penalty proceedings under section 271(1)(c) of the Act and levied penalty, we are of the considered opinion that the ld. CIT(A) shall decide the levy of penalty after denovo adjudication of the quantum addition. Accordingly, we set aside the order of the ld. CIT(A) and remit the matter back to the file of the ld. CIT(A) for fresh consideration after adjudication of the quantum addition and also considering the submissions of the assessee by affording an opportunity of being heard to the assessee.

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