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Facts
The assessee's return for AY 2012-13 was assessed under Section 143(3) with several additions, including the denial of exemption under Section 54. The Assessing Officer initiated penalty proceedings and levied a penalty under Section 271(1)(c) for the denial of exemption under Section 54, while dropping penalties for other additions. The assessee appealed against this penalty order to the CIT(A), whose decision is now under appeal before the Tribunal.
Held
The Tribunal upheld the CIT(A)'s finding that the penalty orders passed under Section 271(1)(c) had become infructuous because the original assessment order was replaced by a set-aside assessment order under Section 143(3) read with Section 254. Consequently, the appeal against the infructuous penalty order was dismissed for statistical purposes.
Key Issues
Whether a penalty levied under Section 271(1)(c) for denial of exemption under Section 54 remains valid when the original assessment order on which it was based has been set aside and replaced by another assessment order.
Sections Cited
143(3), 271(1)(c), 54, 254, 194A, 194I, 24(4)(b), 23
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE
O R D E R
PER NARENDRA KUMAR BILLAIYA, AM:
This appeal by the assessee is preferred against the order dated 30/04/2024 by NFAC, Delhi, [hereinafter ‘the ld. CIT(A)’] pertaining to AY 2012-13. 1.1. Delay is condoned.
The solitary grievance of the assessee is that the ld. CIT(A) erred in confirming the levy penalty u/s 271(1)(c) of the Act amounting to Rs. 3,70,448/-.
2 3. Briefly stated the facts of the case are that the assessee filed his return of income on 28/09/2012, declaring total income at Rs.28,05,809/-. The return was assessed u/s 143(3) of the Act vide order dated 27/03/2015 and income determined that Rs.1,93,01,317/- after making the following additions:-
The assessee preferred appeal before the ld. CIT(A) disputing the additions under clause i, ii & iii above and the ld. CIT(A) vide order dt. 14/10/2016, confirmed the additions and the denial of exemption u/s 54 of the Act was not pursued. The assessee preferred appeal before the Tribunal and the Tribunal vide order dated 09/04/2018, set aside the issue relating to non-deduction of TDS on interest paid to NBFC and on caretaking charges and dismissed the ground relating to deemed rent. Percent to the order of the Tribunal assessment was reframed by repeating the same additions made in the earlier year. The ld. CIT(A) confirmed the addition on account of non-deduction of TDS on interest paid to NBFC and caretaking charges.
The AO initiated penalty proceedings but dropped penalty on non- deduction of TDS on interest paid to NBFC and caretaking charges and 3 also on deemed rent but levied penalty on the denial of exemption u/s 54 of the Act. 6. On the above facts, the ld. CIT(A) held as under:- “Under the available facts, as the original assessment order dated 27.03.2015 has been replaced by the set aside assessment order passed u/s 143(3) ws 254, the penalty orders passed u/s 271(1)(c) in consequence to the original assessment order have become infructuous. Hence the penalty order dated 12.02.2022 has become infructuous. Accordingly, the appeal against the penalty order dated 12.02.2022 has also been rendered infructuous. Accordingly, the appeal is dismissed for statistical purpose.”