M/S.REGIONAL OILSEEDS GROWERS CO-OPERATIVE SOCIETIES UNION LIMITED,CHITRADURGA vs. JOINT COMMISSIONER OF INCOME-TAX, DAVANGERE

The present appeal is filed by the assessee, against the order of the CIT (A), Gulbarga, dt.29.12.2016, for the assessment year 2010-11, on the following grounds of appeal :

It was submitted by the Ld. AR that the Tribunal vide order dt.05.09.2018 in to 1355/Bang/2016, had decided the quantum appeal in favour of the assessee, wherein at paras 6.2 and 6.3, it was held as under : 6.1 On the substantive issue of the disallowance of the assessees claim for deduction under Section 8OP of the Act, since the jurisdictional issues, namely non-furnishing of reasons recorded, validity of issued notices issued under Section 148 of the Act and validity of assumption of jurisdiction by the JCIT in passing the impugned orders of assessment have been remanded back to the file of the Assessing Officer for fresh consideration, in our considered view, adjudication on the substantive issue in the appeals at this stage would be premature. If the issue of notice and passing of orders fail to pass the test, in the light of our directions issued above, the impugned orders of assessment, having no legs to stand on, will fail and consequently so too with the disallowances made. We, therefore, refrain from adjudicating on the substantive issue of allowability of the assessee's claim for deduction under Section 80P of the Act.

On the basis of the above, it was submitted that the action of the AO to levy penalty no more subsists because the quantum addition has already been set aside and remanded back to the AO. Therefore the penalty proceedings pending before this Tribunal is also required to be set aside.

Per contra, the Ld. DR relies on the orders of the lower authorities.

We have heard the rival contentions and perused the material on record. The penalty proceedings were initiated on the basis of the order passed by the AO, whereby the AO had made the addition and thereafter had recommended for imposition of penalty u/s.271(1)(c) of the Act, of Rs.6,65,805/-, for furnishing inaccurate particulars of income. Since the order by which the quantum was added and the AO came to the conclusion that the assessee had furnished inaccurate particulars of income ceases to exist, on account of being set aside by the Tribunal, the initial cause of levy of penalty does not exist, we have no hesitation to delete the ITA.360/Bang/2017 Page -4 penalty pursuant to order passed by the AO dt.05.02.2014. However it will be open for the AO to initiate the penalty proceedings. In case in the remand proceedings the AO comes to a conclusion that this is a case for imposition of penalty as the assessee has either filed inaccurate particulars of income or had concealed the income, penalty proceedings may be initiated again in accordance with law.

In the result, appeal of the assessee is allowed.