T.D.NAIDU,TIRUVALLUR vs. ACIT CENTRAL CIRCLE 2(3), CHENNAI

The appeal filed by the assessee is delayed by 24 days in filing the appeal before the Tribunal, for which, the assessee has filed a petition for condonation of the delay in support of an affidavit, to which; the ld. DR has not raised any serious objection. Consequently, since the assessee was prevented by sufficient cause, the delay of 24 days in filing of the appeal stands condoned and the appeal is admitted for adjudication.

Brief facts of the case are that a search action under section 132 of the Act was conducted at the premises of M/s. Deen Dayal Medical & Educational Trust (DDMET) and Shri T.D. Naidu, Managing Trustee of DDMET on 04.08.2011. Notice under section 153A of the Act was issued and served on the assessee and the return of income was filed on 13.09.2013 declaring total income at ₹.35,200/- and agricultural income of ₹.16,20,000/-. After considering the details furnished against the statutory notices, the Assessing Officer completed the assessment under section 153A r.w.s. 143(3) of the Act by assessing total income of the assessee at ₹.183,36,69,622/- after making various additions. Thereafter, the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act and levied penalty of ₹.56,65,05,000/-. Against the levy of penalty, the assessee preferred an appeal before the ld. CIT(A), which was dismissed after considering the submissions as well as by following the decision in the case of UOI v. Dharmendra Textiles Processors 306 ITR 277 (SC).

On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the quantum addition made under section 153A r.w.s. 143(3) of the Act has not attained its finality and hence, the levy of penalty under section 271(1)(c) of the Act will not survive and prayed for quashing the penalty order.

On the other hand, the ld. DR dutifully supported the orders of the authorities below.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. Against the confirmation of quantum addition, vide order in date 22.03.2018, the Tribunal remitted the matter back to the file of the Assessing Officer for fresh examination. However, against the confirmation of additions by the ld. CIT(A), the Assessing Officer initiated penalty proceedings and levied penalty under section 271(1)(c) of the Act. Once quantum addition has not attained finality, the levy of penalty, the Tribunal cannot decide the levy of penalty on merits. Our view is fortified by the decision of the Hon’ble Jurisdictional High Court in the case of CIT vs. Ramakrishna Sons (P) Ltd. 192 ITR 282. Accordingly, the penalty order passed under section 271(1)(c) of the Act stands quashed. However, the Assessing Officer is free to initiate penalty proceedings afresh after completing the reassessment.