COMMISSIONER OF INCOME TAX -II vs. MANAV INFRASTRUCTURE PVT. LTD.

Facts

The Revenue (Commissioner of Income Tax - II) filed a Tax Appeal before the High Court of Gujarat at Ahmedabad challenging an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had dismissed the Revenue's appeal, thereby upholding the order of the Commissioner of Income Tax (Appeals) which deleted a penalty of Rs. 37,58,994/- imposed under Section 271AAA of the Income Tax Act, 1961. The assessment year in question was 2008-09. The High Court admitted the appeal to consider a substantial question of law. During the hearing, both the Revenue and the assessee (Manav Infrastructure Pvt. Ltd.) agreed to a remand of the matter to the ITAT.

Held

The High Court allowed the appeal and remanded the matter to the Income Tax Appellate Tribunal (ITAT). The impugned judgment and order of the ITAT dated 29.11.2013 was quashed and set aside. The ITAT was directed to decide the appeal against the order of penalty afresh after the quantum appeal, which was pending before the ITAT, is decided first. The Court explicitly stated that no observations were made regarding the penalty imposed under Section 271AAA in favour of either party, as the decision was based on the consensus of the parties to remand the matter. The operative direction is to reconsider the penalty appeal after the quantum appeal is resolved.

Key Issues

1. Whether the Appellate Tribunal has substantially erred in upholding the order of the CIT(A) deleting the penalty of Rs.37,58,994/- levied u/s. 271AAA of the Act? (Question of law) Assessee's Contentions: Not recorded in the judgment. Revenue's Contentions: The Revenue argued that the ITAT erred in deleting the penalty imposed under Section 271AAA. The specific grounds for this contention and any authorities or precedents relied upon are not detailed in the judgment.