SANJAY AGGARWAL vs. INCOME TAX OFFICER AND ORS.

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W.P.(C)/6914/2023HC DelhiDLHC01019660202322 May 2023Bench: HON'BLE MR. JUSTICE RAJIV SHAKDHER,HON'BLE MR. JUSTICE GIRISH KATHPALIA4 pages
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What did the High Court hold?

The High Court held that the Tribunal should not have remanded the matter. The reasoning was that the original assessment order dated 29.12.2011, which was the foundation for the penalty proceedings under challenge, had been superseded by a subsequent assessment order dated 29.06.2021. The Court noted that the fresh assessment order had pegged the petitioner's assessed income at Rs.3,21,390/- and had directed the initiation of penalty proceedings under Section 271(1)(c). However, it was also observed that no penalty proceedings had been initiated pursuant to this fresh order up to the time of the hearing. Consequently, the impugned order of the Tribunal was set aside, leading to the collapse of the penalty proceedings initiated via the order dated 18.03.2014. The Court clarified that this decision would not impact any penalty proceedings that might be initiated based on the assessment order dated 29.06.2021. The writ petition was disposed of in these terms.

What were the facts?

The petitioner, Sanjay Aggarwal, filed a writ petition before the Delhi High Court challenging an order dated 26.12.2022 passed by the Income Tax Appellate Tribunal (Tribunal). This Tribunal order had, in turn, set aside an order dated 29.12.2017 passed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A)'s order had dealt with an appeal against a penalty order dated 18.03.2014 passed by the Assessing Officer (AO) under Section 271(1)(c) of the Income Tax Act, 1961, for Assessment Year (AY) 2009-10. The original penalty was levied at Rs.27,34,356/- based on an assessment order dated 29.12.2011, which had made an addition of Rs.91,82,261/- for unconfirmed sundry creditors. The petitioner stated that the original assessment order was set aside and remanded, leading to a fresh assessment order dated 29.06.2021, which pegged the assessed income at Rs.3,21,390/- and directed initiation of penalty proceedings.

What were the issues?

1. Whether the Tribunal erred in remanding the matter to the AO when the original assessment order dated 29.12.2011, which formed the basis for the penalty proceedings, was no longer in existence, having been set aside and replaced by a fresh assessment order dated 29.06.2021? (Question of law and mixed fact and law, turning on the validity of penalty proceedings based on a superseded assessment order). Assessee's Contention: The petitioner argued that the Tribunal should not have remanded the matter because the assessment order dated 29.12.2011 was no longer valid. Furthermore, despite the fresh assessment order dated 29.06.2021 directing the initiation of penalty proceedings, no such proceedings had been triggered against the petitioner up to the date of the hearing. Revenue's Contention: The revenue, represented by Mr. Kunal Sharma, Sr. Standing Counsel, accepted notice and agreed to argue the matter based on the available record without filing a counter-affidavit, implying no specific argument against the petitioner's contention was recorded.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 254,Section 234A,Section 234B,Section 234C

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W.P.(C) 6914/2023 Page 1 of 4

$~58 * IN THE HIGH COURT OF DELHI AT NEW DELHI

Decision delivered on: 22.05.2023 + W.P.(C) 6914/2023

SANJAY AGGARWAL

..... Petitioner Through: Mr Dinesh Mohan Sinha and Mr Rajeev Kumar Sharma, Advs.

versus

INCOME TAX OFFICER AND ORS. ..... Respondents Through: Mr Kunal Sharma, Sr Standing Counsel.

CORAM:

HON'BLE MR. JUSTICE RAJIV SHAKDHER

HON'BLE MR. JUSTICE GIRISH KATHPALIA [Physical Hearing/Hybrid Hearing (as per request)] RAJIV SHAKDHER, J. (ORAL): 1. Issue notice. 1.1 Mr Kunal Sharma, learned senior standing counsel, accepts notice on behalf of the respondents/revenue. 2. Given the direction that we propose to issue, Mr Sharma says, that counter-affidavit need not be filed, and that he will argue the matter based on the record presently available with the Court. 2.1 Therefore, with the consent of learned counsel for the parties, the matter is taken up for hearing and final disposal, at this stage itself. 3. This writ petition concerns Assessment Year (AY) 2009-10. 4. The petitioner/assessee has assailed the order dated 26.12.2022 passed by the Income Tax Appellate Tribunal [in short, “Tribunal”]. Digitally Signed By:TARUN RANA Signing Date:21.06.2023 13:49:13 Signature Not Verified

W.P.(C) 6914/2023 Page 2 of 4

5.

Before the Tribunal, the petitioner/assessee had assailed the order of the Commissioner of Income Tax (Appeals) [in short, “CIT(A)”] dated 29.12.2017. 6. A perusal of the order dated 29.12.2017 passed by the CIT(A) would show, that before him, the petitioner/asseesee had preferred an appeal against the order dated 18.03.2014 passed under Section 271(1)(c) of the Income Tax Act, 1961 [in short, “Act”] concerning the AY in issue. 7. Via order dated 18.03.2014, the Assessing Officer (AO) had levied, on the petitioner, penalty amounting to Rs.27,34,356/-. 8. Notably, before the CIT(A), there was no representation, either on behalf of the petitioner/assessee or the respondents/revenue. 9. The petitioner avers, that the quantum levy imposed on the petitioner via assessment order dated 29.12.2011 was set aside by the Tribunal in the earlier round. 10. It is claimed, that the matter was remanded to the AO. Furthermore, the petitioner avers, that after the remand, the AO passed a fresh order dated 29.06.2021. 10.1 As a result, the petitioner’s assessed income was pegged at Rs.3,21,390/-. This order was passed under Section 143(3) read with Section 254 of the Act. 10.2 Furthermore, the AO has also directed levy of interest under Section234A, 234B and 234C of the Act. 10.3 In addition thereto, penalty proceedings under Section 271(1)(c) of the Act have also been directed to be initiated.

Digitally Signed By:TARUN RANA Signing Date:21.06.2023 13:49:13 Signature Not Verified

W.P.(C) 6914/2023 Page 3 of 4

11.

Insofar as the earlier assessment order dated 29.12.2011 was concerned, the AO had made an addition, with respect to unconfirmed sundry creditors to the extent of Rs.91,82,261/-. The petitioner’s assessed income was pegged at Rs.95,06,940/-. 12. As would be evident, the CIT(A)’s order dated 29.12.2017, which was set aside by the Tribunal via impugned order dated 26.12.2022 arose out of the earlier penalty order dated 18.03.2014, which in turn was founded on the assessment order dated 29.12.2011. 13. It is the contention of Mr Dinesh Mohan Sinha, who appears on behalf of the petitioner, that the Tribunal should not have remanded the matter, as the assessment order dated 29.12.2011 was no longer in existence. 14. Mr Sinha says, that pursuant to the assessment order dated 29.06.2021, up until now, no penalty proceedings have been triggered against the petitioner, although initiation of penalty proceedings were directed via the said order. 15. Given these circumstances, the impugned order is set aside. Consequently, the order dated 18.03.2014 qua penalty proceedingswill collapse. 16. It is, however, made clear that if penalty proceedings are taken out, pursuant to the assessment order dated 29.06.2021, the order passed by us today will not impact the same. 17. The writ petition is disposed of in the aforesaid terms.

Digitally Signed By:TARUN RANA Signing Date:21.06.2023 13:49:13 Signature Not Verified

W.P.(C) 6914/2023 Page 4 of 4

18.

Parties will act based on the digitally signed copy of the order.

RAJIV SHAKDHER, J

GIRISH KATHPALIA, J

MAY 22, 2023/aj

Digitally Signed By:TARUN RANA Signing Date:21.06.2023 13:49:13 Signature Not Verified

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