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Facts
The assessee's appeal against a penalty order under Section 271(1)(c) of the Income Tax Act for AY 2011-12 was filed after the original assessment order was passed ex parte. The CIT(A) had confirmed the penalty. The assessee contended that since the assessment order was set aside by the Tribunal for de novo assessment, the penalty should be cancelled.
Held
The Tribunal held that the penalty proceedings should also be set aside to the file of the AO for de novo assessment. It was observed that the assessment order was not cancelled but set aside, keeping the proceedings in abeyance.
Key Issues
Whether the penalty imposed under Section 271(1)(c) can be sustained when the original assessment order has been set aside for de novo assessment.
Sections Cited
271(1)(c), 144, 147
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI NARENDRA PRASAD SINHA
(�नधा�रण वष� / Assessment Year : 2011-12) बनाम/ Krupal Vikrambhai Patel The Income Tax Officer 4 Motibag Society, B/h. Ward – 6(1)(4), Vs. Choksi Park, Ahmedabad Bhaduatnagar, Maninagar, Ahmedabad, Gujarat - 380008 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AGMPP1472D (Appellant) .. (Respondent) अपीलाथ� ओर से /Appellant by : Shri M. K. Patel, Advocate ��यथ� क� ओर से/Respondent by : Shri S K Agal, Sr. DR Date of Hearing 20/01/2025 Date of Pronouncement 23/01/2025 O R D E R
PER SHRI NARENDRA PRASAD SINHA, AM:
This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi, (in short ‘the CIT(A)’), dated 26.06.2024 for the Assessment Year 2011-12 in the matter of penalty under Section 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’).
The brief facts of the case are that in the course of assessment proceeding, no compliance was made by the assessee and the assessment order was passed ex parte u/s.144 r.w.s. 147 of the Act on 07.12.2018 at total income of Rs.38,29,010/-. In the course of assessment, an addition of Rs.35,65,526/- was made Vikrambhai Patel vs. ITO] A.Y. 2011-12 - 2 – in respect of unexplained investment as well as unexplained cash deposits. The AO had also initiated penalty proceeding u/s.271(1)(c) of the Act in respect of this addition. Subsequently, penalty order u/s. 271(1)(c) of the Act was passed on 28.06.2019 imposing a penalty of Rs.10,22,126/- @ 100% of tax sought to be evaded.
Aggrieved with the penalty order, the assessee had filed an appeal before the Ld. CIT(A), which was decided vide the impugned order and the penalty imposed by the AO was confirmed.
The assessee is in second appeal before us. The only ground taken by the assessee in this appeal is as under:
1. The Ld. CIT-(A), NFAC, erred in law and on facts in confirming the penalty of Rs.10,22,126/- levied by the AO u/s 271(1)(c) of the Act for the alleged charge of concealment of income.
Shri M. K. Patel, the Ld. AR appearing for the assessee submitted that the assessee had also filed an appeal against the assessment order, which was decided by the Co-ordinate Bench of this Tribunal in dated 13.11.2024 and the matter was set aside to the AO with a direction to allow another opportunity to the assessee and pass the assessment order de novo. The Ld. AR submitted that since the original assessment order is no longer in existence, the penalty imposed by the AO u/s. 271(1)(c) of the Act needs to be cancelled.
Per contra, Shri S K Agal, Ld. Sr. DR submitted that since the original assessment order was set aside to the file of the AO, the penalty order also needs to be set aside to the file of the AO.
Vikrambhai Patel vs. ITO] A.Y. 2011-12 - 3 – 7. We have considered the rival submissions. Since, the assessment order passed in this case has been set aside to the file of the AO with a direction to allow another opportunity to the assessee, we deem it proper to set aside the penalty proceeding as well, to the file of the AO. The contention of the assessee that the penalty order needs to be cancelled cannot be accepted considering the fact that the assessment order passed by the AO was not cancelled by the Coordinate Bench of this Tribunal. By setting aside the matter to the AO, the assessment proceeding has been kept in abeyance with a direction to reframe the assessment. Under the circumstances, we deem it proper to set aside the penalty matter also to the file of the AO with a direction re-visit the issue after completion of de novo assessment.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
This Order pronounced on 23/01/2025
Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 23/01/2025 S. K. SINHA True Copy आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. 2. ��यथ� / The Respondent. संबं�धत आयकर आयु�त / Concerned CIT 3. आयकर आयु�त(अपील) / The CIT(A)- 4. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,