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Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI
ORDER PER RAVISH SOOD, J.M: The present appeal filed by the assessee is directed against the order passed by the CIT(A)-24, Mumbai, dated 07.02.2019 which in turn arises from the order passed by the A.O under Sec.271(1)(c) of the Income Tax Act, 1961 (for short „Act‟), dated 29.06.2017 for A.Y. 2014-15. The assessee has assailed the impugned order on the following grounds of appeal before us:
“1. In the facts and circumstances of the case and in law, the learned CIT(A), Mumbai has erred in deciding the penalty appeal of the appellant without first disposing of the appeal against the assessment order despite the appellant repeatedly requesting for the same.
2. In the facts and circumstances of the case and in law, the learned CIT(A), Mumbai has erred in sustaining the penalty imposed by Assessing Officer u/s. 271(1)(c) of Rs. 62,98,060/- without appreciating the legal and factual matrix of the case.
The appellant craves leave to add, alter, delete or modify all or any of the above grounds of appeal. All the above grounds are without prejudice to each other.”
2 M/s Bul Infradevelopers Pvt. Ltd. VS. ITO-15(1)(3)
Briefly stated, the assessee company which is engaged in the business as that of a civil contractor had e-filed its return of income for A.Y. 2014-15 on 21.03.2016, declaring a total income of (-) Rs.2,03,44,020/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. Subsequently, the case of the assessee company was selected for scrutiny assessment under Sec. 143(2) of the Act.
3. Observing, that the assessee during the year in question had claimed interest expenses of Rs.2,03,82,070/- the A.O called upon it to furnish the requisite details as regards the said expenditure. As the assessee failed to furnish the details of the aforementioned expenses, the A.O, thus treated the same as an unexplained expenditure within the meaning of Sec. 69C of the Act. Accordingly, the income of the assessee was assessed by the A.O vide his order passed under Sec. 144, dated 28.12.2016 at an income of Rs.38,050/-. At the time of culmination of the assessment proceedings the A.O inter alia initiated penalty proceedings under Sec. 271(1)(c) of the Act. 4. After culmination of the assessment proceedings the A.O passed a rectification order under Sec. 154 of the Act, dated 03.08.2017 and brought the addition/disallowance u/s 69C of Rs.2,03,82,070/- to tax as per the provisions of Sec. 115BBE of the Act. Subsequently, the A.O called upon the assessee to put forth an explanation as to why penalty under Sec. 271(1)(c) may not be imposed on it as regards the interest expenses of Rs.2,03,82,070/- that was disallowed under Sec. 69C while framing the assessment under Sec. 144, dated 28.12.2016. As the assessee failed to substantiate its claim for the expenses in question, the A.O vide his order passed u/s 271(1)(c) dated 29.06.2017 imposed a penalty of Rs.62,98,060/-. 5. Aggrieved, the assessee assailed the order passed by the A.O under Sec. 271(1)(c), dated 29.06.2017 before the CIT(A). However, the CIT(A) not finding favour with the contentions advanced by the assessee dismissed the appeal. 6. The assessee being aggrieved with the order passed by the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative (for short „A.R‟) for the assessee at the very outset of the hearing of the appeal submitted that the CIT(A) had erred in disposing off the assessee‟s appeal against the penalty imposed by the A.O under Sec. 271(1)(c) without disposing off the quantum appeal for the year in question that was pending before him. It was 3 M/s Bul Infradevelopers Pvt. Ltd. VS. ITO-15(1)(3)
submitted by the ld. A.R that the persistent requests of the assessee before the CIT(A) for disposal of the quantum appeal before disposing off the appeal against the penalty imposed under Sec. 271(1)(c) had gone in vain. In the backdrop of the aforesaid facts, it was submitted by the ld. A.R that in all fairness the matter may be restored to the file of the CIT(A) with a direction to dispose off the appeal afresh after disposing off the quantum appeal that was pending before him.
Per contra, the ld Departmental Representative (for short „D.R‟) did not raise any objection to the aforesaid request of the counsel for the assessee.
We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. As is discernible from the order of the CIT(A), we find that it was the claim of the assessee that the quantum appeal due to lack of proper guidance could not be filed with the first appellate authority. However, the assessee had thereafter on 22nd August, 2018 assailed the quantum assessment by preferring an appeal with the CIT(A). In fact, as is borne from the records, the quantum appeal against the order passed by the A.O under Sec. 144, dated 28.12.2016 was filed by the assessee in the course of hearing of the appeal by the CIT(A) against the penalty imposed by the A.O under Sec. 271(1)(c). As is discernible from the order of the CIT(A), the assessee had in the course of hearing of the appeal against the penalty imposed by the A.O under Sec. 271(1)(c) had requested the first appellate authority that the hearing of the said appeal be deferred and be taken up after the quantum appeal was disposed off by him. However, the aforesaid request of the assessee for keeping the appeal filed against the penalty imposed under Sec. 271(1)(c) in abeyance till the disposal of the quantum appeal did not find favour with the CIT(A). As observed by us hereinabove, the CIT(A) after proceeding with the merits of the case had thereafter upheld the penalty imposed by the A.O under Sec. 271(1)(c) and dismissed the appeal.
Before us, it is the claim of the ld. A.R that as the quantum appeal is pending disposal before the CIT(A) thus, in all fairness, the impugned order passed by the first appellate authority disposing off the appeal against the penalty imposed by the A.O under Sec.271(1)(c) may be restored to his file with a direction to take up the same afresh after disposing the quantum appeal. We have given a thoughtful consideration to the aforesaid claim of the 4 M/s Bul Infradevelopers Pvt. Ltd. VS. ITO-15(1)(3)
assessee and find substantial force in the same. As the fate of the quantum appeal filed by the assessee against the assessment framed by the A.O under Sec.144, dated 28.12.2016 will have a bearing on the penalty imposed under Sec. 271(1)(c) thus, in our considered view the disposing of the appeal against the penalty imposed by the A.O under Sec. 271(1)(c) would not only be premature, but in fact, the same may also lead to multiplicity of litigation. Accordingly, in all fairness, we are of a strong conviction that in the totality of the facts the order passed by the CIT(A) disposing off the appeal against the penalty imposed by the A.O under Sec. 271(1)(c) requires to be restored to the file of the first appellate authority, with a direction, that the same be taken up after disposing off the quantum appeal for the year in question. We, thus, herein restore the present appeal to the file of the CIT(A) for fresh adjudication after disposing off the quantum appeal which is stated to be pending before him. Before parting, we may herein clarify that our observations recorded hereinabove shall in no way have any bearing on the exercise of the discretion vested with the CIT(A) under sub-section (3) of Sec. 249 of the Act i.e as regards condoning the delay, if any, involved in filing of the quantum appeal by the assessee before him. As we have restored the matter to the file of the CIT(A) thus, we refrain from adverting to the contentions raised by the assessee on merits qua the penalty imposed upon it under Sec. 271(1)(c) of the Act, which it shall remain at a liberty to raise before the CIT(A) in the course of the „set aside‟ proceedings.
The appeal of the assessee is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in the open court on 26.03.2021 Sd/- Sd/- Pramod Kumar Ravish Sood (VICE PRESIDENT) (JUDICIAL MEMBER) Mumbai, Date: 26.03.2021 PS: Rohit 5 M/s Bul Infradevelopers Pvt. Ltd. VS. ITO-15(1)(3)