CIGNA HEALTH SOLUTIONS INDIA PVT LTD.,MUMBAI vs. ASST CIT 12(1)(2), MUMBAI

Erred in levying penalty of Rs.78,53,071/- on the enhancements made of Rs.2,54,14,470/- to the total income on the ground of concealment of particulars of income.

Without prejudice to the above, the learned CIT(A) has erred in levying penalty without appreciating the following facts: a. that the enhancements were made without providing an opportunity of being heard thereby violating the principles of natural justice. b. that the enhancement of Rs.54,65,476 was made by restricting the allowable expenditure to the extent of revenue from operations of Rs. 22,08,686 without any cogent reasons. Further, the details of expenditure debited to the profit and loss account of Rs.76,74,162 were provided during the course of assessment proceedings to the assessing officer and were also subjected to statutory audit. The learned CIT(A) has also erroneously stated the amount of revenue from operations as Rs. 22,08,686 instead of Rs. 24,08,686. c. that the enhancement of Rs. 1,99,30,449 made on account of alleged inconsistency in the financial statement, was merely on account of restatement/ reclassification with no impact on profit and loss account. d. that the enhancement of Rs.18,545 was made on the basis of the tax audit report submitted during the course of appellate proceeding. 3. Erred in levying penalty without appreciating the fact that a rectification application under section 154 of the Act dated 23 may 2019 is filed against the CIT(A) order dated 31 December 2018 and which is pending to be processed. The rectification application on being processed would result in the aforesaid enhancement being deleted and therefore, question of penalty should not arise. 4. Violated the principles of natural justice by not giving an opportunity of being heard before passing an order under section 271(1)(c) of the Act. The appellant craves leave to add, alter, vary omit, substitute or amend any or all of the above grounds of appeal

Being aggrieved by the penalty order passed by the CIT(A), the assessee is before us.

Ld. A.R submitted that the CIT(A) levied penalty on the enhancement made to the total income in the order issued u/s 250 of the Income Tax Act, dated 31.12.2018 for A.Y. 2013-14. In the quantum appeal, the assessee preferred the appeal against the order of the CIT(A) and the Tribunal vide order dated 25.11.2020 set-aside the order of the CIT(A) on enhancement and remanded the matter, back to the file of the CIT(A) for fresh adjudication. (ITA No. 1117/Mum/2019 and ITA No. 1650/Mum/2019). Therefore, the ld. A.R submitted that as the quantum appeal which was the basis for levying penalty u/s 271(1)(c) of the Act has been set-aside by the Tribunal for fresh adjudication, the order levying penalty needs to be quashed.

The ld. D.R relied upon the assessment order and the penalty order passed by the CIT(A) as well as the order of the CIT(A) whereby enhancement of the assessment is directed by the CIT(A).

We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that for assessment year 2013-14 the quantum appeal being has already been restored back to the file of the CIT(A) for making the fresh adjudication. It will be appropriate to restore this matter to the file of the CIT(A) for taking proper cognizance in 4 Cigna Health Solutions India Pvt. Ltd. Vs. ACIT-12(1)(2)

In the result, the appeal of the assessee is partly allowed for statistical purposes.