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Income Tax Appellate Tribunal, DELHI BENCH ‘E’ NEW DELHI
Before: SHRI SUDHANSHU SRIVASTAVA & SHRI O.P. KANT
This appeal by the Assessee is directed against the order dated 27.1.2015 of the Ld. CIT(A)-6, Delhi relating to assessment year 2002-03 on the following ground:-
“That without appreciating the facts of the case and in law, the Ld. CIT(A) has erred in confirming the levy of penalty of Rs. 74,23,475/- and the same be deleted.”
The facts in brief are that assessment in this case was completed u/s. 147/143(3) of the I.T. Act, 1961 on 18.12.2009 at total income of Rs. 12,04,65,870/- as against returned income of Rs. 98136620/- which was processed u/s. 143(1)(a). Subsequently, a notice u/s. 148 of the Act was issued, in response to which the assessee filed return on 21.4.2009 declaring income of Rs. 134051840/- by making two additions namely Rs. 2,07,96,847/- on account of payment in the nature of illegal gratification in Iraq and Rs. 15,32,406/- on account of disallowance u/s. 14A of the Act. AO observed that the assessee has furnished inaccurate particulars of its income and initiated penalty proceedings u/s. 271(1)(c) of the Act and issued penalty notice u/s. 274 r.w.s 271(1)(c) of the Act dated 18.12.2009. However against the assessment order, the assessee company filed an appeal before the Ld. CIT(A) and on its request the penalty proceedings u/s. 271(1)(c) were kept in abeyance till disposal of appeal filed before the Ld. CIT(A). Further a show cause notice u/s. 271(1)(c) of the Act was issued on 20.3.2013 and duly served upon the assessee requiring to show cause as to why penalty u/s. 271(1)(c) of the Act should not be imposed upon in light of the facts and circumstances of the case. In response, a letter dated 25.3.2013 was filed by the assessee before the AO claiming therein that it has preferred an appeal before the ITAT, Delhi against the quantum additions confirmed by the Ld. CIT(A) and requested that penalty proceedings may be kept in abeyance till the disposal of the appeal by the ITAT. AO observed that there is no contradiction to say that the assessee has deliberately furnished inaccurate particulars of its income to the tune of Rs. 2,17,90,646/- (Rs.
2,07,96,847/- + 9,93,799/-) and was not able to bring on record bonafide reasons that the addition/disallowance was not relating to furnishing inaccurate particulars and for concealment of income. Accordingly, the AO imposed the penalty of Rs. 77,79,262/- u/s. 271(1)(c) of the Act being 100% of the tax on the income sought to be evaded by furnishing inaccurate particulars of income vide order dated 30.3.213 passed u/s. 271(1)(c) of the Act. Against the aforesaid penalty order, the assessee appeal before the Ld. CIT(A), who vide his impugned order dated 27.01.2015 has partly allowed the appeal of the Assessee by confirming the action of AO in imposing the penalty on account of disallowance of illegal gratification of Rs. 2,07,96,847/- and deleted the penalty on account of disallowance made u/s. 14A amounting to Rs. 9,93,799/-.
Aggrieved, the Assessee is in appeal before the Tribunal.
At the time of hearing, Ld. A.R. for the Assessee, stated that the reassessment proceedings on which the penalty has been imposed, has already been quashed by the ITAT, New Delhi Coordinate Bench in (AY 2002-03) vide Order dated 30.11.2016. In this behalf he filed the copy of the Tribunal’s Order dated 30.11.2016 in assessee’s own case and he requested that penalty in dispute may be deleted.
On the other hand, Ld. DR relied upon the orders of the authorities below.
We have heard the rival submissions and perused the records. We find that in assessee’s own case in (AY 2002-03) vide order dated 30.11.2016, the Coordinate Bench of Delhi Tribunal had quashed the reassessment proceedings vide para no. 5 at pages 14 to
For the sake of convenience, we are reproducing the relevant portion of the Tribunal order dated 30.11.2016 as under:-
“5. We have heard the rival submissions and gone through the material available on record. In the present case, since the notice was issued beyond four years from the end of the assessment year, the AO should have obtained the permission from the JCIT in terms of Section 151. Admittedly, the Ld. CIT has granted the approval and not the JCIT as has been contemplated in the Act. The Hon’ble Jurisdictional High Court in the case of CIT vs. SPL’s Siddhartha Ltd. (supra) has held as under:-
“Section 116 also defines the Income Tax authorities as different and distinct Authorities. Such different and distinct authorities have to exercise their powers in accordance with law as per the powers given to them in the specified circumstances. If powers conferred on a particular authority are arrogated by other authority without mandate of law, it will create chaos in the administration of law and hierarchy of administration will mean nothing. Satisfaction of one authority cannot be substituted by the satisfaction of the other authority. It is trite that when a statute requires, a thing to be done in a certain manner, it shall be done in that manner alone and the Court would not expect its being done in some other manner.
Thus, if authority is given expressly by affirmative words upon a defined condition, the expression of that condition excludes the doing of the Act authorized under other circumstances than those as defined. It is also established principle of law that if a particular authority has been designated to record his / her satisfaction on any particular issue, then it is that authority alone who should apply his / her independent mind to record his
/her satisfaction and further mandatory condition is that the satisfaction recorded should be “independent” and not “borrowed” or “dictated” satisfaction. Law in this regard is now well settled.
The Apex Court in the case of AnirudhSinhji KaranSinhji
Jadeja vs. State of Gujarat (1995) 5 SCC 302 has held that if a statutory authority has been vested with jurisdiction, he has to exercise it according to its own discretion. If discretion is exercised under the direction or in compliance with some higher authorities instruction, then it will be a case of failure to exercise discretion altogether.
Therefore, the Tribunal has rightly decided the legal aspect, keeping in view well established principles of law laid down in catena of judgements including that of the Supreme Court.”
5.1 The Hon’ble Delhi High Court has laid down the dictum that if a statute requires a thing to be done in a certain manner, it shall be done in that manner alone and the court would not expect its being done in some other manner. If a statutory authority has been vested with jurisdiction, it has to exercise it according to its own discretion and if the discretion if exercised under the direction or in compliance with some higher authority’s instruction, then it will be a case of failure to exercise discretion altogether. The Hon’ble Delhi High Court held that if the approval was not granted by the Joint
Commissioner but by the Ld. Commissioner of Income Tax, it was not an irregularity curable u/s. 292B and the notice was not valid. In the present case also, the JCIT has not granted the approval and the same has been granted by the Ld. CIT and, therefore, the reassessment framed without proper approval from the competent authority deserves to be quashed. We, accordingly, quash the reassessment proceedings and allow the appeal of the assessee.”
Keeping in view of the facts and circumstances of the case, we find that the reassessment proceedings on which the penalty in dispute was imposed, has already been quashed in assessee’s own case in (AY 2002-03) vide order dated 30.11.2016, as aforesaid, by the Coordinate Bench of Delhi Tribunal, hence, the penalty in dispute will not survive. Accordingly, we cancel the orders of the authorities below and delete the penalty in dispute by allowing the Appeal filed by the Assessee.
In the result, the appeal filed by the Assessee stands allowed.
Order pronounced in the Open Court on 31/08/2018.