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आदेश/Order
Per Sanjay Garg, Judicial Member:
The captioned appeals have been preferred by the assessees against the separate orders dated 10.12.2018 of the Commissioner of
ITA Nos. 96 to 98-chd-2019 M/s Sobhagia Sales Pvt Ltd & Sobhagia Clothing Co., Ludhiana 2
Income Tax (Appeals)-2, Jalandhar [hereinafter referred to as CIT(A)]
agitating the levy of penalty u/s 271AAB of the Act and further
confirmed by the Ld. CIT(A) u/s 154 of the Income Tax Act, 1961 (in
short 'the Act').
Since the appeals having common issue involved were heard
together, therefore, these are being disposed off by this
consolidated order for the sake of convenience and brevity.
First, we shall deal with appeal in ITA No. 96/Chd/2019 for
the Assessment Year 2013-14, wherein, the only ground raised by
the assessee reads as under:-
That order passed u/s 154 of the Income Tax Act, 1961 by the Ld. Commissioner of Income Tax (Appeals)-2, Jalandhar is against law and facts on the file in as much as neither there was any mistake much less apparent mistake in the order dated 15.3.2018 passed by him against levy of penalty of Rs. 2.50 lacs u/s 271AAB by the Ld. Assessing Officer nor was he justified to uphold the penalty on merits.
The assessee in this appeal has contested the conformation of
penalty levied by the Assessing officer @ 10% of the undisclosed
income under section 271AAB (1) of the Income Tax Act.
ITA Nos. 96 to 98-chd-2019 M/s Sobhagia Sales Pvt Ltd & Sobhagia Clothing Co., Ludhiana 3
At the outset, the Ld. Counsel for the assessee has submitted
that the penalty u/s 271AAB of the Act levied by the Assessing
Officer was void abinitio because he has not taken the prior
approval under section 274(2) of the Act, which was accorded vide
letter no. 1026 dt. 30/09/2016 while the penalty order was passed
by the Assessing Officer on 29/09/2016 i.e prior to taking the
approval from the Additional CIT, Central Circle, Range Ludhiana.
That the said column of letter number and date have been hand
filled later on in the typed penalty order. The fact itself speaks
that the Assessing Officer passed the penalty order without taking
the requisite approval from the competent authority and later on
the blank column was filled after passing of the order in question.
The penalty u/s 271AAB of the Act levied by the Assessing Officer
was void abinitio.
In his rival submissions the Ld. Sr. DR strongly supported the
order of the authorities below and further submitted that there may
be a typographical mistake in the order passed under section
271AAB(1) of the Act and by mistake the date was mentioned as
29/09/2016 while the DCR number was dt. 30/09/2016.
We have considered the submissions of both the parties and
perused the material available on the record. To resolve the present
ITA Nos. 96 to 98-chd-2019 M/s Sobhagia Sales Pvt Ltd & Sobhagia Clothing Co., Ludhiana 4
controversy it is relevant to refer the provisions contained in
Section 274(2) of the Act which read as under:
“Section 274(1)………… (2) No order imposing a penalty under this Chapter shall be made- (a) by the Income-tax Officer, where the penalty exceeds ten thousand rupees; (b) by the Assistant Commissioner or Deputy Commissioner, where the penalty exceeds twenty thousand rupees, except with the prior approval of the Joint Commissioner.”
From the above provisions contained in section 274 of the
Act, it is crystal clear that the penalty under section 271AAB of
the Act, which falls in Chapter XXI of the Act shall not be
imposed by the Assessing Officer until and unless prior approval is
taken from the concerned Joint Commissioner of Income Tax
(JCIT). The use of word “shall” make it mandatory to take the
prior approval of the JCIT / Additional CIT before passing the
order imposing the penalty under section 271AAB of the Act. In
the present case it is crystal clear from the penalty order was
passed by the Assessing Officer on 29/09/2016 while the approval
from the Additional CIT, Range Ludhiana was accorded vide letter
no. 1026 dt. 30/09/2016, which clearly established that the penalty
order was passed by the Assessing Officer on 29/09/2016 before
ITA Nos. 96 to 98-chd-2019 M/s Sobhagia Sales Pvt Ltd & Sobhagia Clothing Co., Ludhiana 5
taking the approval from the concerned Additional CIT / J.C.I.T.
The contention of the Ld. DR that the same may be a typographical
mistake is not tenable because the relevant column of ‘approval
letter No.’ and ‘Date’ had been left blank in the penalty order
which have been filled with pen on receipt of said approval letter
and the date mentioned falls after the date of pronouncement of
impugned penalty order. Therefore, the penalty order passed by the
Assessing Officer for levying the penalty under section 271AAB of
the Act is void abinitio. In that view of the matter the impugned
penalty levied u/s 271AAB of the Act by the Assessing Officer and
sustained by the Ld. CIT(A) is deleted.
ITA Nos. 97 & 98/Chd/2019
In ITA Nos. 97 & 98/Chd/2019 for the A.Y. 2014-15, the
facts are identical as were involved in the ITA No. 96/Chd/2018 in
the case of Sobhagia Sales Private Limited, Ludhiana. The only
difference is in the amount of penalty u/s 271 AAB of the Act
levied by the Assessing Officer and sustained by the Ld. CIT(A),
therefore, our findings given in the former part of this order shall
apply mutatis mutandis. Accordingly the penalty levied by the
Assessing Officer under section 271AAB of the Act and sustained
by the Ld. CIT(A) in this appeal is also deleted.
ITA Nos. 96 to 98-chd-2019 M/s Sobhagia Sales Pvt Ltd & Sobhagia Clothing Co., Ludhiana 6
In the result, the captioned appeals of the assessees are
allowed.
Order pronounced in the Open Court on 27.09.2019
Sd/- Sd/- (संजय गग� / SANJAY GARG) (एन. के. सैनी / N.K. SAINI) उपा�य� /Vice President �या�यकसद�य/ Judicial Member Dated : 27. 09.2019 “आर.के.”
आदेशक���त�ल�पअ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकरआयु�त/ CIT 4. आयकरआयु�त (अपील)/ The CIT(A) 5. �वभागीय��त�न�ध, आयकरअपील�यआ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड�फाईल/ Guard File
आदेशानुसार/ By order, सहायकपंजीकार/ Assistant Registrar