VIJAYKUMAR JAGANNATH AGGARWAL,MUMBAI vs. INCOME TAX OFFICER, 1(1)(1), MUMBAI

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ITA 2171/MUM/2024Status: DisposedITAT Mumbai15 January 2025AY 2014-156 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty orders passed by the AO and confirmed by the CIT(A) were premature. The Tribunal noted that the earlier appeal before the CIT(A) was dismissed for statistical purposes because it was filed offline, and the assessee was given liberty to re-file it online. The Tribunal found that the CIT(A) had misunderstood the situation and confirmed the penalty without appreciating that the quantum appeal was still pending adjudication before him. Therefore, the Tribunal set aside the penalty order and restored it back to the CIT(A) for passing a fresh order after deciding the quantum appeal on its merits. The grounds relating to the merits of the case were not adjudicated at this stage. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, Vijaykumar Jagannath Aggarwal, filed an appeal against a penalty order of Rs. 2,39,004/- passed under Section 271(1)(c) of the Income-tax Act, 1961, for Assessment Year 2014-15. The penalty was levied by the National Faceless Appeal Centre (NFAC), Delhi, based on an addition made by the Assessing Officer (AO) under Section 68 for alleged non-genuine long-term capital gains from penny stock transactions. The CIT(A) had confirmed the penalty, stating that the quantum appeal was dismissed. The assessee contended that the quantum appeal was dismissed for statistical purposes only, to allow re-filing online, and the merits were yet to be decided. The CIT(A) had upheld the penalty, believing the quantum appeal was dismissed.

What were the issues?

1. Whether the CIT(A) erred in confirming the penalty of Rs. 2,39,004/- under Section 271(1)(c) when the quantum appeal was dismissed for statistical purposes only, and not on merits. Assessee's contentions: - The CIT(A) confirmed the penalty based on the erroneous premise that the quantum appeal was dismissed on merits by the FAA (NFAC). - The quantum appeal was dismissed for statistical purposes because it was filed offline, with an opportunity given to file it online. - The CIT(A) confirmed the penalty prematurely without waiting for the disposal of the re-filed quantum appeal on its merits. - There was no concealment of income or furnishing of inaccurate particulars as capital gains were offered in the return, and the AO merely changed the head of income from capital gains to income under Section 68. - The transactions were made through registered brokers in the stock market and reflected in Demat statements, with no material evidence of concealment or inaccurate particulars. Revenue's contentions: - Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 68,Section 143(3)

AI-generated summary — verify with the full judgment below

Before: SHRI SANDEEP GOSAIN & SHRI PRABHASH SHANKAR

For Appellant: Shri Haridas Bhatt,AR
For Respondent: Ms. Nidhi Agarwal (Sr. DR)
Hearing: 13.01.2025Pronounced: 15.01.2025

आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal arising from the appellate order dated 03.04.2024 is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to penalty order passed u/s. 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 15.02.2022 as passed by NFAC, Delhi for the Assessment Year [A.Y.] 2014-15.

GROUND - I

1.

1. On the facts and circumstances of the case, the CIT(A) erred in confirming the penalty of Rs. 2,39,004/-being 100% of the Tax sought to be evaded.

2. On the facts and circumstances of the case and in law the AO failed to appreciate that: a. The CIT A confirming the penalty under the pretext that the quantum appeal is dismissed by the FAA. b. The FAA has dismissed the appeal for statistical purpose only since the appeal was filed offline and giving opportunity to file it online. c. The CITA is yet to dismiss the re-filed appeal on the merits of the case. d. The CITA confirmed the penalty in haste without waiting for the disposal of the quantum appeal.

3.

The appellant, therefore, prays that penalty charged of Rs. 2,39,004/- may please be deleted.

GROUND II

1.

On the facts and circumstances of the case, the CIT(A) has erred in levying the penalty of Rs. 2,39,004/- being 100% of the Tax sought to be evaded.

2.

On the facts and circumstances of the case and in law the AO failed to appreciate that: a. The Assessee has offered the Capital gain in his return of income and thus there is neither any case of concealment of any income nor any case of furnishing of inaccurate particulars of income. b. It is mere change of head of income by AO considering the capital gain as Income U/s68. c. The AO did not bring any material evidence on records that the assessee has furnished inaccurate particulars or concealed any information or particulars.

A.Y. 2014-15 VijayKumar Jagannath Aggarwal d. The said share sale and purchase transactions were made in the Stock market with registered brokers and properly reflecting in the Demat Statements. 3. The appellant, therefore, prays that penalty charged of Rs. 2,39,004/- may please be deleted.

3. Facts in brief are that in this case certain cash credit addition was made by invoking the provisions of section 68 of the Act by the ld.AO while passing the assessment order. It is noticed that addition made in the order is in respect of LTCG of Rs. 2,39,004/-w.r.t. Penny stock transactions. The AO treated such capital gains as non genuine and treated as unexplained income u/s 68 of the Act. Perusal of the penalty order dated 15.02.2022 reveals that the same has been passed in ex parte manner by the way of Faceless penalty proceedings. In the penalty order, the AO took note of the appellate order dated 22.05.2018 claiming it to be dismissal of quantum appeal of the assessee by the ld.CIT(A).Further, in the subsequent appeal filed by the assessee against the said penalty order, the ld.CIT(A)/NFAC upheld the penalty order holding the same view that assessment order was confirmed in the quantum appeal though the appellant him requested to keep the proceedings in abeyance stating that the quantum appeal was pending for adjudication. However, the ld.CIT(A) rejected the request by observing that as per records, it was seen that the assessment for AY 2014-15 in the appellant's case was completed u/s 143(3) on 30-12-2016. The appeal was disposed by the CIT(A)-16, Mumbai A.Y. 2014-15 VijayKumar Jagannath Aggarwal in Appeal No.CIT(A)-16/DCIT- 9(1)(1)/IT-336/2016-17 dated 22-05-2018, dismissing the appeal for statistical purposes. In the circumstances, it was not understood as to why the appellant claims pendency of quantum appeal. Accordingly, he held that there was no merit in the appellant's contention that the present appellate proceedings be kept pending. Therefore, he went on to confirm the penalty order passed by the AO.

4.

In the course of hearing before us, the ld.Authorised Representative has clarified that the ld.CIT (A) erroneously confirmed the penalty under the pretext that the quantum appeal was dismissed by the NFAC. It is submitted that as a matter of fact, it has dismissed the appeal for statistical purpose only since the appeal was filed offline and giving opportunity to file it online.The CIT(A) is yet to dismiss the re-filed appeal on the merits of the case.He confirmed the penalty in haste without waiting for the disposal of the quantum appeal.

5.

We have carefully considered all the relevant facts on record as also the rival contentions. As per records, it is seen that the assessment was completed u/s 143(3) on 30-12-2016. The appeal was disposed by the ldCIT(A)-16, Mumbai in Appeal No.CIT(A)-16/DCIT- 9(1)(1)/IT- 336/2016-17 dated 22-05-2018, dismissing the appeal for statistical A.Y. 2014-15 VijayKumar Jagannath Aggarwal purposes. Perusal of para 3 on page-3 of the appellate order dated 22.05.2018 as passed by the ld.CIT(A)-16,Mumbai clearly shows that according to him the appeal of the assessee was required to be e-filed as per the procedure laid down in Rules 45 and 46. Accordingly, the appeal filed was treated as non est. However, appellant was given the liberty to file appeal again with a request for condonation of delay. Consequently, the appeal was treated as dismissed for statistical purposes. Apparently, the ld CIT(A) has misunderstood the whole issue as it appears that he did not go through the above para in correct perspective and went on treat the appeal of the assessee as dismissed by the earlier CIT(A) in the order dated 22.05.2018 and he himself upheld the penalty order though the quantum appeal was still pending for adjudication before CIT(A) himself.

6.

In view of the above facts, it is evident that the penalty orders passed by the ld.AO and upheld by the ld.CIT(A) are premature and passed without appreciating the fact that the quantum appeal is still pending before the appellate authority. Consequently, finding sufficient force in ground no. I above, we set aside the penalty order restore it back to the ld.CIT(A) for passing it afresh in view of his decision in quantum appeal. Rest of the grounds in ground no.II relating to merits of the case therefore, do not require any adjudication at this stage.

Order pronounced in the open court on 15/01/2025.

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