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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI
Before: SHRI SHAMIM YAHYA & SHRI YOGESH KUMAR US
This appeal is filed by the assessee for assessment year 2011-12 against the order of the ld. Commissioner of Income Tax (Appeals)–2, New Delhi, dated 21.10.2019.
The assessee has raised the following grounds of appeal:-
“1. The Id. Commissioner of Income Tax (Appeals) - 2, New Delhi [hereafter the CIT (A)] failed to provide proper opportunity of hearing to the Assessee. – Rs.5,25,24,551/-
2. The Id. CIT (A) erred in making observations, inter alia, the following:
(1) “the quantum appeal has already been decided dismissing the grounds. The penalty order can, therefore, be decided because the impugned order is dated 21-10-2019, whereas the quantum appeal was decided vide order dated 30-10-2019.
(2) “the specific limb of penalty has already been mentioned in the assessment order itself and the appellant was very much aware of the offence for which it was booked even before receiving the penalty notice” because the assessment order was not available on the record of the Id. CIT(A); and the assessment order reads: “I am satisfied that the assessee has concealed its income and has also not disclosed true particulars of its income”, thus, included both the limbs. The said observations have vitiated the impugned order.
3. The Id. CIT (A) erred in dismissing the appeal summarily by a non-speaking order.
The Id. CIT (A) erred in not considering and deciding the grounds of appeal, most of which are self explanatory.
5. The impugned penalty order dated 24-03-2017 is not maintainable, inter alia, because the assessment order dated 28- 02-2014 u/s 143(3) of the Income Tax Act, 1961 made by the Id. Income Tax Officer, ward -3(2), New Delhi, which is the basis for imposing the penalty u/s 271(l)(c) of the Act, is without jurisdiction, bad in law, null and void ab initio, inter alia, because:
(1) Any valid notice u/s 143(2) of the Act has not been served upon the Assessee within the statutory mandatory period of limitation provided by proviso to section 143(2) of the Act, which is sine qua non to make assessment u/s 143(3) of the Act; (2) The selection of the case for scrutiny through CASS; and without consideration of the return of income and financial statements by the Id. ITO is in gross violation of provisions of section 143(2) of the Act; (3) The Id. Deputy Commissioner of Income Tax, Circle 3(1), New Delhi, having issued the notice dated 17-08-2013 under section 143(2) of the Act, was seized of the assessment proceedings; and the Id. ITO took up the assessment proceedings in the middle and made the assessment, without there being any order by the Competent Authority transferring the jurisdiction of the case to the Id. ITO.
The penalty order dated 24-03-2017 u/s 271(l)(c) of the Act passed by the Id. Income Tax Officer, ward -5(4), New Delhi is without jurisdiction, bad in law, null and void ab initio, inter alia, because the Id. Assistant Commissioner of Income Tax, Circle 5(2), New Delhi was seized of the penalty proceedings u/s 271(l)(c) of the Act vide notice dated 07-03-2017 for the assessment year 2010-11; and thereafter, there is nothing on record to show that the case was transferred to the Id. ITO.
7. The impugned penalty order is not maintainable, inter alia, because the approval u/s 274(2) of the Act by the Id. Addl. Commissioner of Income Tax, is bad in law, inter alia, because the Addl. CIT is not competent / prescribed authority and without prejudice, the approval is mechanical and without application of mind.
The Id. ITO failed to provide proper opportunity of hearing to the Assessee. The observations of the Id. ITO are against the facts of the case. The penalty order is against the facts of the case as well as law.
The Id. ITO erred in imposing penalty in respect of income of Rs. 2,40,41,229, which was declared by the Assessee as ‘Short Term Capital Gains’ but was assessed as ‘income from normal Business’; inter alia, because: – Rs.79,85,895/- (1) The ground for the change of the head of income is not valid and tenable; (2) The change of the head of income is not a valid ground for imposing penalty; (3) Any satisfaction, in respect of this item, to initiate the penalty proceedings has not been recorded in the assessment order.
The Id. ITO erred in imposing penalty in respect of interest earned of Rs.18,69,509; inter alia, because: – Rs.6,21,004/- (1) This income was declared in the return of income; (2) This item has not been discussed in the penalty order; (3) Any satisfaction, in respect of this item, to initiate the penalty proceedings has not been recorded in the assessment order;
The Id. ITO erred in imposing penalty in respect of disallowance of Rs.1,31,79,443 u/s 14A of the Act; inter alia, because: – Rs.43,77,881/- (1) The dividend (exempt income) is only Rs. 2,71,291 and therefore, the disallowance is highly excessive; (2) The expenditure u/s 14A of the Act was disallowed by the operation of law and not on account of the reason that the assessee furnished inaccurate particulars of the income;
The Id. ITO erred in imposing penalty in respect of disallowance of Rs.10,012, being fees paid to the Registrar of Companies, inter alia, because: – Rs.3,326/- (1) The ITO considered this to be for capital enhancement, which as a matter of fact is only Rs.2,000; (2) Genuineness of the expenditure has not been doubted; (3) Without prejudice, merely treating an expenditure as capital expenditure (without admitting) is not a valid ground for imposing penalty; (4) Any satisfaction, in respect of this item, to initiate the penalty proceedings has not been recorded in the assessment order; 13. The Id. ITO erred in imposing penalty in respect of disallowance of Rs.48,37,000 being loss on Chit Fund; inter alia, because: – Rs.16,06,730/- (1) This is an allowable loss; (2) Any reason, whatsoever, has not been stated for the disallowance; (3) Without prejudice, this disallowance has resulted into double disallowance, as the whole of the business loss has been separately disallowed; (4) Any satisfaction, in respect of this item, to initiate the penalty proceedings has not been recorded in the assessment
The Id. Income Tax Officer erred in imposing penalty in respect of liability of Rs.48,75,000 payable to D K Chit Fund; inter alia, because: – Rs.15,86,136/- (1) The addition, being on the sole ground of want of confirmation, is not sustainable; (2) Without prejudice, this disallowance has resulted into double disallowance, as the loss on Chit Fund has been separately disallowed; (3) Any satisfaction, in respect of this item, to initiate the penalty proceedings has not been recorded in the assessment order;
The Id. Income Tax Officer erred in imposing penalty in respect of disallowance of Rs.29,869 being interest on TDS; inter alia, because: – Rs.9,992/- (1) The interest paid is compensatory in nature and is allowable business expenditure; (2) Without prejudice, this disallowance has resulted into double disallowance, as the whole of the business loss has been separately disallowed; (3) Any satisfaction, in respect of this item, to initiate the penalty proceedings has not been recorded in the assessment order;
Id. ITO erred in imposing penalty in respect of disallowance of expenditure of Rs. 75,90,220 u/s 40(a)(ia) of the Act; inter alia, because: – Rs.25,21,281/- (1) The disallowance is not maintainable, as it is on the sole ground that details of payment of TDS of Rs. 7,59,022 has not been fi led and the TDS at the rate of 10% was presumed; the TDS was paid before the due date for filing the return of income, as also mentioned in Form 3CD; (2) Without prejudice, this disallowance has resulted into double disallowance, as the whole of the business loss has been separately disallowed; (3) Penalty u/s 271(1)(c) of the Act cannot be levied for disallowance u/s 40(a)(ia) of the Act; (4) Any satisfaction, in respect of this item, to initiate the penalty proceedings has not been recorded in the assessment order.
The Id. ITO erred in imposing penalty in respect of disallowance of brokerage and commission paid for Rs. 22,19,958 u/s 40(a)(ia) of the Act; inter alia, because: – Rs.7,37,415/- (1) The disallowance is not maintainable, as TDS, wherever applicable, was deducted and was paid before the due date for filing the return of income; (2) Without prejudice, this disallowance has resulted into double disallowance, as the whole of the business loss has been separately disallowed; (3) Penalty u/s 271(l)(c) of the Act cannot be levied for disallowance u/s 40(a)(ia) of the Act; (4) Any satisfaction, in respect of this item, to initiate the penalty proceedings has not been recorded in the assessment order.
The Id. ITO erred in imposing penalty in respect of addition of share capital of Rs. 1,50,000 u/s 68 of the Act, inter alia, because the addition is not sustainable and receipt of share capital is capital receipt. – Rs.49,826/- 19. The Id. ITO erred in imposing penalty in respect of addition of share premium of Rs. 1,48,50,000 u/s 68 of the Act, inter alia, because the addition is not sustainable and receipt of share premium is capital receipt. – Rs.49,32,799/-
The Id. Income Tax Officer erred in imposing penalty in respect of receipt of loan of Rs. 8,52,58,441 u/s 68 of the Act, inter alia, because the addition is not sustainable and receipt of loan is capital receipt. – Rs.2,83,20,723/-
The Id. ITO erred in levying penalty of Rs. 5,25,24,551 u/s 271 (l)(c) of the Act. – Rs.5,25,24,551/-
Total tax effect : Rs.5,25,24,551/- “
None appeared for the assessee though the notice issued by the Registry. By looking into the Grounds of Appeal and the issue involved in the Appeal, we deem it fit to hear the Ld. DR and decide the Appeal. Accordingly, heard the Ld. DR, perused the material on record and gave our thoughtful consideration.
4. The assessee has raised 20 grounds before the CIT(A). Though all the 20 Grounds are in respect of imposing penalty of Rs. 5,25,24,550/- u/271(1)(c), the Ld.CIT(A) has passed a cryptic order which is as follows:-
Ground no. 1 to 20:- All the grounds ate directed against levy of penalty of Rs.5,25,24,551 u/s 271(l)(c) and one technical ground against not mentioning the specific limb of penalty. It is seen that is specific limb of the penalty has already been mentioned in the assessment order itself and the appellant was very much aware of the offence for which it was booked even before receiving the penalty notice. Therefore, the technical ground does not survive.
It is also evident from the order of the Ld.CIT(A) that, the Ld.CIT(A) has not provided the proper opportunity of hearing to the assessee as contended in the Ground No. 1 of the Assessee’s Grounds of Appeal before us. Further, the Ld. CIT(A) has not adjudicated all the grounds urged by the assessee in the Appellate Proceedings.
6. In our considered opinion, the Ld.CIT(A) ought to have decided the Grounds of Appeal by giving an opportunity to the assessee to reconcile the Grounds and should have adjudicated the reconciled grounds of Appeal. Therefore, we deem it if to remand the matter to the file of CIT(A) and the Ld.CIT(A) is directed to dispose of the Appeal on merit as per the above observations. Accordingly, we allow the Assessees’s Ground No. 1 for statistical purpose. Since we have remanded the matter to the file of CIT(A) to decide the Appeal on merits other grounds requires no adjudication at our hands.
In the result, the Appeal filed by the assessee is allowed for statistical purpose.
Order pronounced in the open court on : 26/07/2022.