KURUVILA ALEXANDER,PUNE vs. INCOME TAX OFFICER, WARD 8(1), PUNE

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ITA 561/PUN/2020Status: DisposedITAT Pune30 June 2022AY 2011-124 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the CIT(A) passed an ex-parte order. Considering the circumstances and allowing an additional legal ground, the matter was remitted back to the CIT(A) for a fresh hearing with an opportunity for the assessee to present evidence.

What were the facts?

The Assessing Officer (AO) initiated penalty proceedings under Section 271(1)(c) based on information regarding bogus purchases. The assessee agreed to the disallowance to buy peace, leading to an addition and penalty. The CIT(A) confirmed the penalty ex-parte.

What were the issues?

Whether the penalty under Section 271(1)(c) is sustainable when the assessment proceedings have not attained finality and if the assessee was denied a proper opportunity of hearing before the CIT(A).

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 148,Section 142(1),Section 254(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A”

Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE

For Appellant: Shri M K Kulkarni – AR
For Respondent: Shri Arvind Desai – DR
Hearing: 23/06/2022Pronounced: 30/06/2022

ORDER

PER DR. DIPAK P. RIPOTE, AM:

1.

This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Appeals)-6, Pune for the A.Y.2011-12 dated 28.08.2020. The Assessee has raised the following grounds of appeal: “1.On the facts and in the circumstances of the case and in law the penalty levied by A.0. under S.271(l)(c) for furnishing of inaccurate particulars of income and without proper initiation of such proceedings and the Ld. CIT(A) confirming the penalty levied without application of mind and appreciation of legal position placed before her, the penalty levied is not sustainable in law. It be quashed.

A.Y. 2011-12 Kuruvila Alexander Vs. ITO, Ward-8(1), Pune (A)

2. On the facts and in the circumstances of the case and in law though without appreciating the legal position surrendered such bogus purchases for taxation the law with the help of judicial precedents says and clarifies differently. It is settled law that assessment and penalty proceeding having different connotations the penalty cannot be levied and sustained merely on the basis of additions made to income. When all the information material is placed on record but the issue is not allowed by the authorities below it cannot be called "inaccurate particulars of income" per jurisdictional Bombay High court Judgment. The penalty u/s 271(l)(c) is not sustainable. It be quashed.

3.

On the facts and in the circumstances of the case and in law it is trite law that the penalty u/s 271(l)(c) cannot be levied unless such proceedings attain finality. The MA filed by the assessee under S. 254(2) is yet to be heard in which primarily jurisdictional issue has been raised. It be held accordingly.”

2.

Brief facts of the case are that the assessee is engaged in the business of manufacturing of various types of Precision Tools etc., The Assessing Officer(AO) received information the Sales Tax Department that the assessee has indulged in bogus purchases to the tune of Rs.1,21,501/- from the two parties i.e. Balaji Impex and Nidhi Sales Corporation. A notice under section 148 of the Act was issued on the assessee after recording satisfaction. Thereafter, another notice under section 142(1) of the Act was also served on the assessee. In response, the assessee submitted that the original return may be treated as Return in response to notice under section 148 of the Act. In the course of proceedings before the AO, the assessee

A.Y. 2011-12 Kuruvila Alexander Vs. ITO, Ward-8(1), Pune (A) agreed to the disallowance proposed by the AO in order to buy peace of mind. Ergo, the AO made addition of the said sum and levied penalty under section 271(1)(c) of the Act amounting to Rs.37,544/- for filing inaccurate particulars of income. The AO further made additions of Rs.1,48,387/- on account of loss on sale of car and Rs.10,000/- on account of debiting of donation. Eventually, the AO determined the total income at Rs.14,73,585/-.

3. Aggrieved by the order of the AO, the assessee filed appeal before the ld.CIT(A) contesting the penalty appeal i.e. order under section 271(1)(c) of the Act and relied on the order of ITAT Pune Bench in order dated 28.04.2017. It is seen that the ld.CIT(A) passed the order ex-parte confirming the quantum addition as well as penalty levied under section 271(1)(c) of the Act, in view of the confession made by the assessee before the AO.

4.

Before us, the ld.AR for the assessee submitted that the assessee could not represent his case before the ld.CIT(A) and urged the Bench to grant one more opportunity in the interest of principles of natural justice. He also filed an additional ground relying on the judgment of the Hon’ble Bombay High Court in Pr.CIT vs. Mohammed Haji Adam & Co.,

A.Y. 2011-12 Kuruvila Alexander Vs. ITO, Ward-8(1), Pune (A)

5.

We have heard both the parties and perused the material available on record. It is an admitted position that the ld.CIT(A) passed an ex-parte order qua the assessee affirming the penalty levied by the AO. Considering the facts and circumstances in the extant case, and allowing the additional ground raised by the ld.AR being purely legal in nature, we deem it appropriate to remit the matter to the file of ld.CIT(A) affording reasonable opportunity of hearing to the assessee. We also direct the assessee to file necessary documentary evidences as considered expedient. Accordingly, grounds raised by the assessee are allowed for statistical purpose.

6.

In the result, appeal of the Assessee is Allowed for Statistical Purpose. Order pronounced in the open Court on 30th June, 2022.

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