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Facts
The assessee's appeal is against the CIT(A)'s order confirming a penalty imposed by the AO under Section 271(1)(c) for AY 2011-12. The assessee contends that the penalty is premature as the appeal against the assessment order, which is the foundation for the penalty, is still pending.
Held
The Tribunal held that the imposition of penalty by the Assessing Officer was premature because the quantum appeal, which forms the basis of the penalty, was still pending before the CIT(A). Therefore, the penalty order was set aside.
Key Issues
Whether the penalty imposed under Section 271(1)(c) is premature when the appeal against the underlying assessment order is still pending.
Sections Cited
271(1)(c), 250, 251, 144, 147
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Income Tax Appellate Tribunal, “A” BENCH MUMBAI
Before: SHRI SAKTIJIT DEY, HONBLE & SHRI GIRISH AGRAWAL
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, vide order no. ITBA/NFAC/S/250/2024-25/1073077389(1), dated 10.02.2025, passed against the penalty order by Income Tax Officer, Ward-30(1)(1), Mumbai, u/s.271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 28.06.2019, for Assessment Year 2011-12.
Grounds taken by the assessee are reproduced as under:
Abhay Dattatray Javlekar Assessment Year 2011-12 “(1). That, on facts and in the circumstances of the case, the order of the Ld. CIT(A), NFAC in dismissing the appeal filed by the appellant is arbitrary, erroneous, contrary to law and is opposed to the principles of natural justice, equity & fair play.
(2). That, on facts and in the circumstances of the case, the Ld. CIT(A), NFAC has passed the order u/s 250 without giving sufficient opportunity of being heard and thus violating the principles of 'audi alteram partem' (3). That, on facts and in the circumstances of the case, the Ld. CIT(A). NFAC has erred in confirming the penalty u/s 271(1)(c) of the IT Act, imposed by the Ld. AO to the tune of Rs. 7,78,315/- for FY 2010-11 relevant to AY 2011-12.
(4). That, on facts and in the circumstances of the case, the Ld. CIT(A), NFAC has erred in passing the impugned order u/s 250 which is in respect of order u/s 271(1)(c), without considering the fact that the appeal in respect of the assessment order passed u/s 144 r.w.s. 147 on 18.12.2018 is still pending before the National Faceless Appeals Centre which is the very foundation of the penalty order.
(5). That, on facts and in the circumstances of the case, the Ld. CIT (A), NFAC has erred in not appreciating the fact that the assessment order passed u/s 144 r.w.s. 147 which is the very foundation of this penalty order is an Ex parte order wherein sufficient opportunity of being heard was not granted to the appellant.
(6). That, on the facts and in the circumstance of the case, the Ld. CIT (A), NFAC has erred in passing the order u/s 250 without bringing any cogent material on record to prove, which is bad in law.
(7). That, on the facts and in the circumstances of the case, the Ld. CIT (A) has erred in passing the order u/s 250 which is non speaking order and without giving sufficient opportunity to explain the case, as only one notice u/s 250 was issued during the entire appellate proceedings.
(8). That, on facts and in the circumstances of the case, the Ld. CIT (A), NFAC has passed the order u/s 250 in a mechanical way, without application of mind and without appreciating the overall facts of the case.
(9). The appellant may kindly be allowed to add, alter or modify any other modify any other points to the grounds of appeal at any time before or at the time of hearing.
(10). Any other order in the interest of justice may kindly be passed.”
Issue in the present appeal relates to imposition of penalty u/s. 271(1)(c) of the Act for an amount of Rs.7,78,315/-. Important fact brought out before us is that appeal in respect of assessment order passed u/s. 144 r.w.s. 147 dated 18.12.2018 is still pending before
We have also perused the order of learned CIT(A) whereby the grounds raised by the assessee are disposed off summarily. It is a cryptic order without taking into account facts of the case and without giving proper reasoning for imposition of penalty. Paragraph 2 from this order is reproduced below which reflects the casual approach adopted, contrary to the provisions contained in Section 250 and 251 of the Act.
“2. During the course of assessment proceedings, it is seen that the assessee had traded in the script of M/s. Ashutosh Paper Mill Ltd. This scrip is penny stock of M/s. Ashutosh Paper Mill Ltd. This scrip is penny stock scrip, which have been used for generating bogus LTCG/STCL through pricing rigging. On analysis of data, it was found that above named assessee is one of the beneficiaries who had traded in the following scrip during FY 2010-11 relevant to A.Y.2011-12. Penalty u/s.271(1)(c) of the Act was initiated and notice u/s.271(1)(c) is confirmed.”
Since the quantum appeal is pending for disposal before the learned CIT(A,) imposition of penalty by the learned Assessing Officer is premature. Accordingly, we find it appropriate to set aside the impugned penalty order and remit the matter back to the file of learned Assessing Officer for denovo consideration after taking into account the outcome of the appeal against the impugned assessment order pending before the learned CIT(A). Accordingly, the grounds raised by the assessee in the present appeal are allowed for statistical purpose.