VIKASH,BHIWANI vs. ITO WARD -2, BHIWANI

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ITA 5238/DEL/2019Status: DisposedITAT Delhi25 August 2022AY 2011-124 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty was not sustainable because the basis for the penalty, which was the earlier additions, no longer existed after the revised assessment. The AO had accepted the returned income with a minor addition and did not intend to impose a penalty in the revised assessment.

What were the facts?

The assessee appealed against a penalty levied under Section 271(1)(c) of the Income Tax Act. The Assessing Officer (AO) had initially made additions, leading to the penalty. However, subsequent proceedings before the Tribunal and the AO resulted in a significantly reduced total income.

What were the issues?

Whether a penalty under Section 271(1)(c) can be sustained when the assessment order on which it was based has been superseded by a revised assessment where the original additions are not considered income concealment.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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

Before: SHRI C.M. GARG & SHRI PRADIP KUMAR KEDIA

For Appellant: Shri Vikash
For Respondent: Shri Anil Kumar Sharma, Sr. DR
Hearing: 23.08.2022Pronounced: 25.08.2022

ORDER

PER C.M. GARG, JM:

1.

This appeal filed by the assessee is directed against the order dated 14.03.2019 of the CIT(A)-5, Ludhiana, relating to Assessment Year 2011-12.

2.

The grounds of appeal

raised by the assessee read as under:- “1. That the learned Commissioner of Income Tax (Appeals)-5, Ludhiana has erred both in law and on facts in upholding penalty of Rs. 30,71,933/- in an order dated 14.3.2019 under section 271(l)(c) of the Act.

2. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that in absence of any specific show cause notice having been issued, the levy of penalty is otherwise wholly misconceived.

3. That furthermore that since no valid satisfaction was recorded in the order of assessment, penalty levied is otherwise was without jursidction.

4. That the learned Commissioner of Income Tax (Appeals) has sustained the penalty by failing to appreciate that assessment proceedings are not conclusive and could not have proceeded to validly sustained the penalty as if it is a quantum appeal.

5. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding the penalty without considering submission of assessee and without granting any opportunity of being heard much less valid and proper opportunity and therefore order made is contrary to principles of natural justice and hence a nullity.

6. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that there was no material placed on record or in the penalty made so as to form an opinion that appellant had concealed income.

7. That penalty upheld by the learned Commissioner of Income Tax (Appeals) without arising a finding that assessee has concealed income or furnished inaccurate particulars of income is illegal, invalid and unsustainable.

8. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate the factual matrix of the case of the appellant and evidence on record and conclusions thus drawn mechanically are wholly unjustified Prayer : It is therefore prayed that the penalty levied of Rs.30,86,668/- u/s 271(l)(c) of the Act and sustained by the learned Commissioner of Income Tax (Appeals) may kindly be deleted.”

3.

The ld. Sr. DR candidly agreed to the factual submissions of ld. Assessee’s representative (AR) tha the Tribunal by order dated 10.11.2020, restored the issue to the file of the AO and the AO in the re-adjudication order dated 12.10.2021, has accepted returned income of Rs.2,58,822/- and had also made only addition of Rs.50,000/- on account of household expenses added back to the returned income. Thus, the AO has finalized the assessment at a total income of Rs.3,08,822/- in the order dated 12.10.2021.

4.

The ld. Sr. DR also did not dispute that the AO by referring to the order of the ld.CIT(A)-5, Ludhiana in appeal No.783/ROT/CIT(A)-5/LDH/2018-19 dated 14.03.2019 this addition of Rs.50,000/- has not been treated as concerned income. Finally, the ld. Sr. DR did not dispute the contention of the ld. AR that penalty imposed u/s 271(1)(c) of the Act on the basis of earlier additions made by the AO in the earlier assessment order dated 28.02.2014 which is not in existence after assessment order passed on 12.10.2021 in pursuance of the Tribunal order dated 10.11.2020 (supra) is not sustainable in view of the fact that the AO has not imposed or recommended or intended to impose penalty u/s 271(1)(c) of the Act on the assessee and has allowed relief to the assessee. Therefore, penalty imposed by the AO and confirmed by the ld.CIT(A) is not sustainable. The AO is directed to delete the penalty.

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