M/S. GAYATRI SEWA SANSTHAN,GHAZIABAD vs. DCIT, CIRCLE-1, GHAZIABAD

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ITA 3956/DEL/2018Status: DisposedITAT Delhi04 August 2022AY 2010-113 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 imposed in the original proceedings would not survive because the underlying additions were set aside. However, it clarified that the Assessing Officer is at liberty to initiate fresh penalty proceedings in the remand proceedings if warranted.

What were the facts?

The assessee's appeal concerns a penalty levied under Section 271(1)(c). The original additions made by the Assessing Officer were set aside by the Tribunal and restored for fresh assessment. The Assessing Officer subsequently passed a fresh assessment order.

What were the issues?

Whether a penalty under Section 271(1)(c) can survive when the underlying additions leading to the penalty have been set aside by the Tribunal. The issue of fresh penalty proceedings in remand is also touched upon.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “C”: NEW DELHI

Before: SHRI KUL BHARAT & SHRI PRADIP KUMAR KEDIA

For Appellant: Ms. Deepashree Rao, CA
Hearing: 02.08.2022Pronounced: 04.08.2022

O R D E R PER KUL BHARAT, JM: This appeal, by the assessee, is directed against the order of learned CIT(Appeals), Muzaffarnagar, dated 30.03.2018 pertaining to the assessment year 2010-11. The assessee has raised following ground of appeal:

“That on the facts as well as in law the Ld. CIT(Appeal) Muzaffarnagar was not justified in confirming the penalty of Rs. 35,53,500/- u/s 271(1)(c) of the Income Tax Act, 1961.”

2.

At the outset learned counsel for the assessee submitted that the present

M/s Gayatri Sewa Sansthan Vs. DCIT appeal is filed against the penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961 (in short “the Act”). She submitted that quantum proceedings relating to the impugned penalty matter travelled up to the stage of the Tribunal and the Tribunal in set aside the impugned additions to the file of the Assessing officer for decision afresh. Learned counsel submitted that, therefore, the impugned penalty does not survive. She further stated that Assessing Officer has already passed assessment order in the remand proceedings. She prayed that the impugned penalty be deleted.

3.

On the contrary, learned Sr. DR supported the orders of the authorities below.

4.

We have heard rival contentions. We find that in this case assessment u/s 143(3) was completed determining total income at Rs. 1,24,84,900/- against the returned income of Rs. 9,84,900/-. Thereby the Assessing Officer had made addition of Rs. 90,00,000/- and Rs. 25,00,000/- u/s 68 of the Act. Penalty proceedings were also initiated which culminated into the levy of the impugned penalty. However, in quantum appeal being the Tribunal vide order dated 18.08.2020 had set aside the addition and restored the matter to the file of the Assessing Officer to make assessment afresh. The Assessing Officer yet again vide order dated 30.03.2022 sustained the additions and initiated penalty proceedings u/s 271(1)(c) separately. Therefore, under these undisputed facts, in M/s Gayatri Sewa Sansthan Vs. DCIT our considered view the penalty imposed in the original proceedings would not survive at present, hence the same is hereby set aside. Before parting, we clarify that we have not expressed any view on the merit of initiation of penalty proceedings by the Assessing Officer in remand proceedings. The Assessing Officer would be at liberty to deal with the same in accordance with law. After adjudication of issues in quantum on merits, it will be discretion of the Assessing Officer to consider initiation of penalty proceedings on issues involved afresh, in accordance with law.

5.

In the result, assessee’s appeal is allowed for statistical purposes. Order pronounced in open court on 4th August, 2022.

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