SUDHIR VORA,MUMBAI vs. ACIT- CC -3(2), MUMBAI

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ITA 5109/MUM/2018Status: DisposedITAT Mumbai27 November 2019AY 1998-994 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the addition on which the penalty was levied has been set aside and restored to the AO, the penalty order cannot survive. Therefore, the penalty order was quashed.

What were the facts?

The assessee appealed against a penalty levied under Section 271(1)(c) for assessment year 1998-99. The penalty was based on an addition related to commission income. The ITAT had previously set aside the assessment related to this addition back to the Assessing Officer (AO).

What were the issues?

Whether a penalty order can survive when the underlying addition on which it was based has been set aside and restored to the Assessing Officer for verification.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI

Before: Shri Shamim Yahya (AM) &Shri Pawan Singh (JM)

For Appellant: Shri AL Sharma (AR)
For Respondent: Shri Akhtar H Ansari (Sr.DR)

Appellant by Shri AL Sharma (AR) Respondent by Shri Akhtar H Ansari (Sr.DR) Date of hearing 27-11-2019 Date of pronouncement 27-11-2019 O R D E R

PER PAWAN SINGH, JM :

1.

This appeal filed by the assessee is directed against the order of CIT(A)-51, Mumbai dated 04-06-2018, which in turn arises againt the penalty levied under section 271(1)(c) dated 31.03.2015 for assessment year 1998-99. The assessee has raised the following grounds of appeal:-

1. A.On the facts and circumstances of the case, the learned CIT(A) erred in holding that the penalty levied of Rs.1400000/- u/s 271(1)(c) on the quantum addition related to the commission income earned stands confirmed on the quantum as determined by the AO as per the direction of Hon’ble ITAT.

B. The learned CIT(A) erred in stating that penalty is confirmed inspite of the fact that Hon’ble Tribunal has set

2 ITA 5109/Mum/2018 aside the assessment to the file of the AO and as such appellant submits that the penalty order is also to be set aside.”

2.

At the outset of hearing, the Ld.AR of the assessee submits that the addition on the basis of which penalty was levied by AO has been restored back to the file of AO by Tribunal, vide order dated 28-09- 2017 in & 4440&4441/M2013. The Ld. AR submits that once the addition has been restored back to the file of assessing officer on which penalty was levied; the penalty order would not survive. The Ld.AR furnished copy of order of the Tribunal dated 29-08-2017.

3.

On the other hand, the Ld. DR for the revenue, after going through the contents of the order of Tribunal dated 29-08-2017 submits that the fact was considered by the Ld. CIT(A) in his order while confirming the penalty. 4. We have considered the submission of both the parties and have gone through the orders of authorities below. We find that the Ld. CIT(A), despite recording the fact at para 5 of his order that the Tribunal has restored to the file of AO, still, passed contradictory order. 5. We have seen that the assessing officer levied penalty of Rs. 140,000/- (being little higher of 100%), of tax sought to be evaded). on the 3 ITA 5109/Mum/2018 disallowance of alleged un-recorded commission of Rs.4,39,494/-.

There is no other issue or disallowances on which penalty was levied.

We have further seen that the disallowance of Rs. 439494/- have been restored back to the file of assessing officer by Tribunal in its order dated 29.08.2017 with the following direction: “23. Under this issue, the assessee has challenged the confirmation of commission of Rs. 4,39,494/-. The contention of assessee is that the said amount has already been assessed with his brother Naresh B Vora therefore the said commission is not liable to be considered in the hand of assessee, therefore, in the said circumstances, the present addition is not justifiable which can be verified in accordance with law. This fact needs to be verification therefore finding of the CIT(A) in this regard does not seems justifiable hence, order in this regard is hereby ordered to be set-aside and we restored this issue on the file of the AO to verify this fact that an amount of Rs. 4,39,494/- and it’s commission has already been considered in the hand of the assessee or not. The AO would pass the order on this issue after giving an opportunity being heard to the assessee. Accordingly, this issue is being decided in favour of assessee against the revenue.”

6.

Considering the fact that the addition on the basis of which the penalty was levied for the year under consideration, has been set-aside, therefore, we are of the view that penalty order will not survive at this juncture. Therefore, the penalty order dated 31-03-2015 is set aside/ quashed. However, the assessing officer is at liberty to initiation of 4 ITA 5109/Mum/2018 penalty in accordance with law after giving effect to the order of Tribunal dated 29-08-2017.

5.

In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 27-11-2019.

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