SRI. S NACHIMUTHU,NAMAKKAL vs. ITO WARD 2, NAMAKKAL

Both the appeals filed by the assessee are directed against different orders of the ld. Commissioner of Income Tax (Appeals), Salem, dated 08.02.2018 relevant to the assessment year 2012-13 passed under section 271(1)(c) of the Income Tax Act, 1961 [“Act” in short].

Brief facts of the case are that there was a survey under section 133A of the Act in the residence cum business premises of Shri S.M. Sakthivel at Door No. 311, E.B. Colony, Mohanur. From the survey report, the Assessing Officer noticed that Shri S.M. Sakthivel along with 14 others carried on business in sand of quarrying under the name “Pettapalayam Reach”. Shri Sakthivel has admitted in his sworn statement that the net income from sand of quarrying business was ₹.69,09,200/- and his share of income was 2.5%, as supported by the noting made in page 7 of SVS Note Book No. 5, which was impounded by the survey team. Since the assessee was having share of income at 2.5% in the above business and in order to tax the income escaped from assessment, notice under section 148 of the Act was served. After considering various submissions, verification of various materials on record, the Assessing Officer completed the assessment under section 144 r.w.s. 147 of the Act by determining the total income of the assessee at ₹.4,08,150/-. Similarly, in the case of the assessee Sri S. Nachimuthu (HUF) was determined at ₹.4,57,000/-.

The assessees carried the matter in appeal before the ld. CIT(A). After considering submissions of the assessee, the ld. CIT(A) gave part relief to both the assessees.

After giving effect to the order passed by the ld. CIT(A), the Assessing Officer proceeded to initiate penalty proceedings by issuing notice under section 271(1)(c) of the Act. The AR of the assessee has prayed that the assessee has not concealed any particulars of his income and that the penalty proceedings initiated be dropped. After considering the submissions of the assessee, the Assessing Officer levied penalty under section 271(1)(c) of the Act in respect of both the assessees, which were confirmed by the ld. CIT(A). Against levy of penalty, the assessees are in appeal before the Tribunal.

The ld. DR strongly supported the order passed by the ld. CIT(A).

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. Prima facie, on perusal of the penalty order, we find that the penalty orders were nothing but giving effect to the order passed by the ld. CIT(A). What was concealed or furnished inaccurate particulars by the assessee were not discussed in the penalty order. Moreover, we find that as per provisions of section 275(1) of the Act, no order imposing a penalty shall be passed in a case where the relevant assessment or other order is the subject matter of an appeal, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated or six months from the end of the month in which the appellate order is passed, whichever period expires later. In this case, appellate order against quantum addition was passed vide order in dated 31.10.2013 and ITA. No.11/2008-09 dated 31.10.2013 in respect of both the assessees [Sri S. Nachimuthu (Individual) and S. Nachimuthu (HUF)] respectively, wherein, the penalty order under section 271(1)(c) of the Act was passed on 30.03.2015 and 27.03.2015 respectively, which are clearly barred by limitation on both counts as per statute. Thus, both the penalty orders are liable to be not maintainable. Accordingly, we set aside the order passed by the ld. CIT(A) and quash the penalty orders passed under section 271(1)(c) of the Act.

In the result, both the appeals filed by the assessees are allowed. Order pronounced on the 13th September, 2019 in Chennai.