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Facts
The assessee's assessment for AY 2016-17 included undisclosed capital gains, unexplained cash deposits (Section 69), and interest income. A penalty of Rs. 60,25,000/- was levied under Section 271D for violation of Section 269SS due to receiving cash for immovable property sale. The CIT(A) set aside the quantum assessment to the AO for fresh consideration and consequently dismissed the penalty appeal as infructuous.
Held
The Tribunal noted that the CIT(A) set aside the case to the AO due to the assessee's non-compliance during reassessment. Considering amendments to Section 251 (Finance Act, 2021), the Tribunal found it appropriate to set aside the impugned order regarding the penalty and restore the appeal to the AO. The AO is directed to dispose of the penalty issue along with the quantum assessment.
Key Issues
Whether a penalty imposed under Section 271D for violation of Section 269SS becomes infructuous when the quantum assessment proceedings are set aside, and the independence of penalty proceedings from quantum assessment.
Sections Cited
147, 144, 69, 271D, 269SS, 251
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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI K.NARASIMHA CHARY & SHRI BALAKRISHNAN S
सुिवधई की तधरीख/Date of hearing: 03/03/2025 घोर्णध की तधरीख/Pronouncement on: 07/03/2025 आदेश / ORDER PER K. NARASIMHA CHARY, J.M: Aggrieved by the order dated 27/11/2024 passed by the learned Commissioner of Income Tax (Appeals), (“learned CIT(A)”)-10, Hyderabad in the case of Shri Kandregula Peddi Raju (“the assessee”) for the assessment year 2016-17, revenue preferred this appeal.
Brief facts of the case are that assessment in the case of the assessee was completed and order under section 147 read with section 144 of the Income Tax Act, 1961 (“the Act”) dated 30.03.2022 was passed by the learned Assessing Officer by treating the sale consideration of Rs.57,64,432/- received (after giving indexation on the cost of acquisition) as undisclosed long term capital gains, cash deposits in the two bank accounts totalling to Rs.1,90,60,000/- as unexplained cash deposits under section 69 of the Act and interest income amounting to Rs.14,573/- under the head ‘income from other sources’.
Penalty proceedings under section 271D of the Act were initiated for violation of provisions of 269SS and a penalty of Rs.60,25,000/- was levied, wherein, the assessee has accepted cash amounting to Rs.60,25,000/- as sale consideration against sale of immovable property vide Document No.4767/2015 dated 17.11.2015.
Aggrieved by the penalty order, assessee preferred an appeal before the learned CIT(A) and the learned CIT(A) set aside the assessee’s case to the file of the learned AO for fresh consideration as the assessee remained non- compliant during the reassessment proceedings and the AO passed ex-parte orders. Learned CIT(A) held that in view of the fact the quantum assessment proceedings has been set aside to the file of the AO for fresh consideration, adjudication on the appeal against the penalty becomes infructuous, hence not adjudicated and dismissed the appeal for statistical purposes.
Aggrieved by the order of the learned CIT(A), Revenue preferred appeal before the Tribunal and contended that the learned CIT(A) erred in holding that the penalty under section 271D becomes infructuous on the ground that the quantum assessment proceedings were set aside, without appreciating the fact that the penalty proceedings under section 271D are independent in nature and has no nexus with the set aside quantum assessment proceedings. . Learned DR further contended that the assessee himself admitted that he had received cash of Rs.60,25,000/- on sale of immovable property, in violation of provisions of section 269SS and thus the penalty proceedings under section 271D are valid and the outcome of quantum assessment proceedings have no bearing on the penalty proceedings.
None appeared for the assessee during the course of hearing of the appeal.
We have gone through the record in light of submissions made by the Ld.DR. It is evident that in view of amendment to section 251 of Income Tax
3 Act, 1961, vide Finance Act,2021 with effect from 1st day of October, 2024 the learned CIT(A) set aside the case of the assessee to the file of the Assessing Officer as the assessee remained non-compliant during the assessment proceedings and held that since the quantum assessment proceedings has been set aside to the file of the AO for fresh consideration, adjudication on the appeal against the penalty becomes infructuous. In these factual circumstances, we deem it appropriate to set aside the impugned order and restore the appeal to the file of the learned AO to dispose of the issue along with quantum appeal.
In the result, the appeal of the Revenue is allowed for statistical purpose.
Order pronounced in the Open Court on 7th March, 2025.