SUMAN NILAKANTH MASAL ,AHEMDNAGAR vs. ITO WARD-2, AHMEDNAGAR

Facts of the case, in brief, are that the assessee is an individual and has not filed her return of income for the impugned assessment year. Information was available with the department that the assessee during the year had made cash deposit of Rs.23 lakhs, sold immovable property of Rs.53,60,000/-, made fixed deposit of Rs.33 lakhs and earned interest on securities of Rs.96,483/-, therefore,

During the course of assessment proceedings the Assessing Officer asked the assessee to explain the source of cash deposit and investment in FD and asked the assessee to explain as to why short term capital gain should not be brought to tax. In absence of any proper explanation from the side of the assessee, the Assessing Officer completed the assessment u/s 147 r.w.s. 143(3) r.w.s. 144B of the Act determining the total income of the assessee at Rs.87,56,480/- by treating Rs.53,60,000/- as short term capital gain and treating the time deposits of Rs.33 lakhs as unexplained investment u/s 69 of the Act. The Assessing Officer thereafter initiated penalty proceedings u/s 270A of the Act for under-reporting the income in consequence of mis-reporting under the Act. During the penalty proceedings the Assessing Officer gave opportunity to the assessee. However, in absence of any submission made by the assessee, the Assessing Officer levied penalty of Rs.35,39,370/- u/s 270A of the Act being the penalty @ 200% of the tax sought to be evaded.

Since despite number of opportunities granted by the Ld. CIT(A) / NFAC there was non-compliance from the side of the assessee, the Ld. CIT(A) / NFAC sustained the penalty levied by the Assessing Officer u/s 270A of the Act.

The Ld. Counsel for the assessee at the outset submitted that the quantum appeal of the assessee was pending before the Ld. CIT(A) / NFAC and the assessee was under the impression that once the quantum is deleted, the penalty does not survive, therefore, there was no compliance from the side of the assessee. He submitted that in the interest of justice the penalty issue be restored to the file of the Ld. CIT(A) / NFAC with a direction to decide the penalty appeal after completion of the quantum appeal proceedings.

The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(A) / NFAC.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. It is an admitted fact that due to non-compliance to the statutory notices issued by the office of the Ld. CIT(A) / NFAC, he dismissed the appeal filed by the assessee for want of prosecution and thereby sustained the penalty levied by the Assessing Officer u/s 270A of the Act. It is also an admitted fact that the quantum appeal of the assessee is still pending before the Ld. CIT(A) / NFAC. In our opinion, the penalty appeal should have been decided only after the quantum appeal is decided. Under these circumstances and considering the totality

In the result, the appeal filed by the assessee is allowed for statistical purposes.

अपील र्थी / The Appellant; 2. प्रत्यर्थी / The Respondent

4. The concerned Pr.CIT, Pune DR, ITAT, ‘B’ Bench, Pune 5. ग र्ड फ ईल / Guard file.