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Facts
The assessee's penalty order under Section 271(1)(c) was passed based on an assessment order which was later set aside by the Tribunal. Subsequently, in the re-assessment proceedings, no additions were made.
Held
The Tribunal held that since the assessment order, which formed the basis for the penalty, was set aside, the penalty order under Section 271(1)(c) would not survive. Therefore, the grounds of appeal raised by the assessee were allowed.
Key Issues
Whether a penalty order under Section 271(1)(c) can survive when the original assessment order, which was the basis for its initiation, has been set aside by the appellate tribunal.
Sections Cited
271(1)(c), 144, 143(3), 68, 147, 254, 114B
AI-generated summary — verify with the full judgment below
Subhas Shibukumar Bose ITO, Ward – 28(3)(1), Mumbai Room No. 102, Siddhi Samarth IT-Office, Vasi Railway Station Co-op Housing Society, Plot No. Vs Building, Vashi, Navi Mumbai, D-47, Sector-20, Nerul, Navi Maharashtra-400703. Mumbai, Maharashtra-400706. PAN: AHTPB7474M (Appellant) (Respondent ) Assessee Represented by : Shri Rajesh S. Shah, CA Shri Satyaprakash R. Singh, CIT-DR Department Represented by : Date of Conclusion of hearing : 10.06.2025 Date of Pronouncement of Order : 10.06.2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER;
Thisappeal by the assessee is directed against order of CIT(A) / NFAC dated27.02.2025 for the A.Y. 2010-11.The assessee has raised the following grounds of appeal: -
1. a) The learned CIT(A) erred in passing an ex-parte order of penalty u/s. 271(1)(c) of the act on 27.02.2025.No notices in respect of appellate proceedings before the CIT(A) were issued for hearing. The appellant passed the order on the basis of order passed by CIT(A) on 23.03.2023 though subsequently the order of learned CIT(A) in respect of the assessment has been set aside by the Income Tax Appellate Tribunal. b) The appellant pleads that the order of CIT(A) in respect of penalty order may be quashed.
2. On facts and circumstances of the case and in law, the learned CIT(A) erred in confirming the penalty order without fully considering the facts that the quantum appeal has been set aside by the Income Tax Appellate Tribunal and the assessment is still pending
3. On the facts and circumstances of the case and law, the learned CIT(A) erred in confirming the penalty levied u/s. 271(1)(c) of the act of Subhas Shibukumar Bose Rs. 9,73,441/- though there was reasonable cause for not levying the penalty. 4. The appellant craves leave to add, to amend, to modify, to substitute to withdraw and/or to cancel any of the grounds of appeal
.”
2. Rival submissions of both the parties have been heard and record perused. The Learned Authorised Representative (Ld.AR) of the assessee submits that assessment was completed under section 144 r.w.s. 143(3) on 07.11.2017. The assessing officer while passing the assessment order made addition of Rs. 31,50,296/- under section 68 on account of cash credit and other credit in State Bank of India and The Greater Bombay Co-operative Bank. On appeal before ld. CIT(A), such addition was upheld vide order dated 28.03.2023. However, on further appeal before Tribunal, the assessment order and order passed by ld. CIT(A) was set aside and matter was restored back to the file of assessing officer in order dated 29.12.2023 in ITA No. 2010-11. In the mean time, the assessing officer levied penalty of Rs. 9,73,441/-under section 271(1)(c) vide order dated 09.05.2018 The assessing officer while passing order giving effect accepted explanation of assessee and no addition was made. The ld. AR of the assessee submits that once assessment order, which was the basis of initiation of penalty has been set aside, penalty order under section 271(1)(c) will not survive. Thus, the issue / grounds of appeal raised by assessee is covered in favour of assessee.
On the other hand, the ld. CIT – DR for the Revenue supported the orders of lower authorities.
We have considered the rival submissions of both the parties and have gone through the orders of lower authorities as well as order of Tribunal in Shibukumar Bose 3262/Mum/2023 dated 29.12.2023 and order giving effect passed by assessing officer under section 147 r.w.s. 254 with section 114B dated 06.03.2025. On considering aforesaid orders, we find that it is an admitted fact that assessment order dated 07.11.2017, which was the basis of initiation of penalty under section 271(1)(c) has already been set aside and in order giving effect no further addition was made by assessing officer, therefore, the penalty levied under section 271(1)(c) vide order dated 09.05.2018 will not survive. In the result, the grounds of appeal raised by assessee is allowed.