DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 1, AURANGABAD vs. M/S. PRABHA FARMS PVT.LTD, AURANGABAD,

Briefly stated, the facts of the case are that the assessee filed return with Nil income. The Assessing Officer completed the assessment u/s.143(3) of the Act determining total income of Rs.3,57,10,580/- under the head `Capital gains‟. Thereafter, penalty of Rs.77,24,199/- was imposed by the AO u/s.271(1)(c) on account of such addition which came to be deleted in the first appeal.

Having heard both the sides through Virtual Court and perused the relevant material on record, it is noticed that the quantum appeal of the assessee came up for consideration before the Tribunal. Vide order dated 27-02-2020, the Tribunal in has restored the matter to the file of AO for fresh consideration and decision. Since the matter in quantum proceedings has been restored to the file of the Assessing Officer, we are of the considered opinion that it would be in the fitness of things if the matter concerning the penalty on such amount is also sent back to be decided in conformity with the view taken by the Assessing Officer in the proceedings pursuant to the directions given by the Tribunal in quantum proceedings. We order accordingly. Needless to say, the assessee will be allowed a reasonable opportunity of hearing in this regard. Our view in restoring the penalty to the AO is fortified by the judgment of the Hon‟ble Supreme Court in the case of Mohd. Mohatram Farooqui vs. CIT (SC) 2010-TIOL-23-SC-IT in which it has been held that if addition is restored to the AO, then penalty should also be restored. The Hon‟ble Delhi High Court in Sanjay Gupta vs. CIT (2014) 366 ITR 18 (Del) has also held that where the quantum has been remanded to the AO, the question of penalty on account of the said amount being treated as undisclosed income, should also be remanded to the AO.

In the result, the appeal is allowed for statistical purposes. Order pronounced in the Open Court on 29th September, 2020.