AGEMO EXIM LTD.,UTTAR PRADESH vs. ITO, MEERUT

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ITA 3517/DEL/2016Status: HeardITAT Delhi28 September 2021AY 1999-20004 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that there was no mistake apparent from the record in the penalty order that could be rectified under Section 154. The pendency of quantum appeal proceedings does not automatically render a penalty order erroneous. The appeal against the Section 154 order was found to be without merit.

What were the facts?

The assessee filed an application under Section 154 seeking rectification of a penalty order passed under Section 271(1)(c). The assessee argued that the penalty proceedings should be kept in abeyance as quantum appeal proceedings were pending. The Assessing Officer rejected the rectification application, and the CIT(A) dismissed the assessee's appeal against this order.

What were the issues?

Whether a penalty order under Section 271(1)(c) can be rectified under Section 154 when quantum appeal proceedings are pending. Whether the pendency of quantum appeals constitutes a mistake apparent from the record in penalty proceedings.

Which sections of the Income-tax Act were involved?

Section 154,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI

Before: MS. SUCHITRA KAMBLE & SHRI PRASHANT MAHARISHI

For Respondent: Shri Praksh Dubey, Sr. DR
Hearing: 15/09/2021Pronounced: 28/09/2021

O R D E R PER PRASHANT MAHARISHI 1. This appeal is filed by the assessee against the order of the ld CIT (A)- Meerut dated 28.03.2016 wherein, the appeal is filed against the order passed u/s 154 of the Act by the ld AO. The ld CIT(A) passed the order on 28.03.2016 dismissing the appeal of the assessee.

2.

Brief facts of the case shows that the assessee filed an appeal before the ld CIT (A) against the order passed u/s 154/ 271(1)(c) passed on 07.07.2004 by the ITO, Ward-1(1), Meerut.

3.

The ld AO passed original assessment order u/s 271(1)(c) of the Act on 21.03.2014 wherein, he levied penalty of Rs. 70 lacs u/s 271(1)(c) of the Act. In the above penalty order, the assessee made an application u/s 154 of the Act on 12.04.2014. The assessee submitted that the penalty order received by it on 26.03.2014 stating that quantum appeal are pending before the ld CIT(A) and therefore, this penalty proceedings should be kept in abeyance. The assessee further referred to the order of Page | 1 the ld CIT(A) stating that the quantum addition is also subjected to the order of the honourable High Court. Disposing of the above application the ld AO passed an order on 07.07.2014 stating that the merits of the penalty has already been considered in the impugned order levying penalty u/s 271(1)(c) of the Act and therefore, there is no case for rectification u/s 154 of the Act of penalty order and thus an order dismissing the application of the assessee preferred u/s 154 of the income tax act stating that there is no mistake apparent from the record was passed on 07.07.2014.

4.

Against this order, the assessee is in appeal before us. The assessee has raised following grounds of appeal:- “1. Because the learned Commissioner of Income Tax (Appeals) erred in law as well as on facts while confirming the following disallowances : Disallowance by Disallowed by Assessing Assessing Officer and confirmed by CIT Officer (Appeals) Extent Amount Penalty u/s 271(1)© Rs.70,00,000.0 Full Rs.70,00,000.0 0 0

2. Because, the following observations of the learned CIT (Appeals) in the Order are perverse, arbitrary, baseless and misleading:

3. Because the learned CIT (A) in his order Ground No-1 has accepted that the Income Tax Act is an independent Act but relied upon the Judgment of CESTAT under Customs Act while disallowing of benefit of Section 80 HHC against the Law.

4. Because in Ground 2 the learned CIT (A) has passed an incomplete order „ In case the claim is also rejected by the Hon‟ble High Court and the matter reaches finality and is finally decided against the appellant, the addition of Rs. 1,85,37,736.00 be treated as deleted.”

5. Because the penalty imposed is also against the Law as the CIT (A) has passed the order keeping the final order in abeyance.

6. Kindly stay the demand pending decision in appeal.

7. The appellant carves leave to add / alter grounds of appeal before or at time of hearing.

8. That in any case the additions/disallowance made are arbitrary and excessive and against the Law.” Page | 2

5.

The appeal was fixed for hearing on 15.09.2021 but nobody appeared on behalf of the assessee. Similar is the fate of hearing on 14.09.2021, 28.06.2021, 19.04.2021, 10.04.2021, 30.10.2019, 14.08.2019. Only on 07.01.2021, Mr. Ashwani Kumar Jain appeared and filed an adjournment application. He was also directed on the same to file copy of assessment order, this order till to date has not been complied with. In view of this, we do not find any other alternative but to decide the issue on the merit of the case as per information available on record.

6.

The ld DR supported the order of the lower authorities. It was submitted that the learned assessing officer has correctly rejected the application u/s 154 of the act and the learned CIT – capital has also decided the issue correctly. Merely because the appeal is pending in quantum proceedings cannot prohibit the learned assessing officer in passing the penalty order. 7. We have carefully considered the contentions of the ld DR and perused the orders of the lower authorities. In the present case the penalty order u/s 271(1)(c) of the Act was passed by the ld AO on 21.03.2014 levying a penalty of Rs. 70 lacs. The penalty was initiated vide assessment order dated 22.12.2006 where in it is found that the bogus export to Russia has been made for conversion of black money through Hawala channel and the assessee claimed deduction u/s 80HHC of the Act of Rs. 1,85,37,730/-. The addition was confirmed by the ld CIT(A). The matter reached at the level of ITAT who set aside the matter back to the file of the ld AO. In the set aside proceedings the ld AO passed an order dated 30.12.2011 confirming the addition once again and initiated penalty proceedings. Against the assessment order the assessee filed appeal before the ld CIT(A), which was dismissed on 16.08.2012 and therefore, penalty, was levied by the ld AO. The claim of the assessee is that there are certain correction are required in the order of the ld CIT(A) while dismissing the quantum appeal of the assessee in the second round of appeal and therefore, penalty could not have been levied and therefore, there is an error in the order of the ld AO which is rectifiable u/s 154 of the Act. The ld CIT(A) has categorically held that order of the levy of Page | 3

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