RATHI BARS LIMITED,NEW DELHI vs. ACIT, CC-16, NEW DELHI

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ITA 8062/DEL/2019Status: DisposedITAT Delhi21 September 2022AY 2015-165 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that due to the changed factual position regarding additions after the quantum appeal, the penalty issue must be restored to the Assessing Officer for fresh consideration. The Assessing Officer must provide an opportunity of being heard to the assessee.

What were the facts?

The assessee's appeal concerns a penalty imposed under Section 271AAB. The Assessing Officer made additions to income, and the CIT(A) granted partial relief. The Tribunal had previously deleted some additions and restored another issue to the CIT(A).

What were the issues?

Whether the penalty imposed under Section 271AAB is sustainable when the additions forming the basis of the penalty have been significantly altered by appellate orders. The need for fresh adjudication of penalty in light of changed facts.

Which sections of the Income-tax Act were involved?

Section 271AAB,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI

For Appellant: Shri Ramkumar Verma, Manager
For Respondent: Ms. Maimum Alam, Sr. DR
Hearing: 21.09.2022Pronounced: 21.09.2022

ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER: This is an appeal by the assessee against order dated 31.07.2019 of learned Commissioner of Income-Tax (Appeals)-26, New Delhi, confirming penalty imposed under Section 271AAB of the Income- Tax Act,1961 pertaining to assessment year 2015-16.

2.

We have considered rival submissions and perused material on record. As could be seen from the facts on record, while completing the assessment under Section 143(3) of the Act, the assessing officer made the following additions:

i) Undisclosed income on sales made to Rs.23,7535 M/s. Hari Iron India Ltd.; ii) Undisclosed income on sales made out of Rs.2,45,856 books; iii) Difference in stocks: Rs.58,40,136

3.

Assessee contested the aforesaid additions before learned Commissioner (Appeals). Learned Commissioner (Appeals) granted partial relief to the assessee by sustaining the additions made on account of difference in stocks to the extent of Rs.17,67,071. Against the order of learned Commissioner (Appeals), assessee preferred an appeal before the Tribunal. However, during the pendency of the assessee’s appeal before the Tribunal, the assessing officer passed an order on 30.03.2019 imposing penalty of Rs.12,21,997 under Section 271AAB of the Act on the additions remaining after order of learned Commissioner (Appeals). The penalty so imposed was also confirmed by learned Commissioner (Appeals).

4.

We have observed, while deciding assessee’s appeal contesting the additions sustained by learned Commissioner (Appeals), the Tribunal vide order dated 28.02.2022 in and Ors. has deleted the two additions out of the three made by the assessing officer. In other words, the Tribunal deleted the additions of Rs.23,735 and Rs.2,45,856. In so far as addition of Rs.17,67,071 made on account of difference in stock, the Tribunal has restored the issue to learned Commissioner (Appeals) for de novo adjudication. Thus, in view of the changed scenario because of the decision of the Tribunal in the quantum proceedings, in our opinion, the issue relating to imposition of penalty under Section 271AAB of the Act has to be restored back to the assessing officer as factual position relating to the additions based on which penalty was imposed have changed.

Accordingly, we set aside the impugned order of learned Commissioner (Appeals) and restore the matter to the assessing officer for initiating penalty proceedings afresh, if warranted, depending upon the status of the addition made on account of difference in stock after culmination of the appellate proceedings.

5.

Needless to mention, before imposing penalty, the assessing officer must extend adequate opportunity of being heard to the assessee by following the procedure laid down in the Statute.

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