R.L. TRADERS PVT. LTD.,NEW DELHI vs. ACIT, NEW DELHI

The Ld. CIT(A) has erred on facts as well as in law in imposing the penalty even though it was not initiated by him.

The Ld. CIT(A) has erred on facts as well as in law in imposing the penalty even though the appellant has discharged onus, the appellant having filed the names, addresses, Permanent Account Numbers, confirmation and even though the transactions are though banking channel, T.D.S. is duly deducted on the interest paid on which the Creditors have paid taxes. 2. Briefly stated facts of the case are that while passing the appellate order dated 30/09/2014, the Ld. CIT(A) enhanced the income of the assessee and initiated penalty proceeding under section 271(1)(c) of the Act. After providing opportunity of being heard to the assessee and considering the written submission dated 13/01/2015, the Ld. CIT(A) levied penalty under section 271(1)(c) of the Act by way of a combined order dated 30/01/2015 for assessment year 2000-01 to 2006-07, which included the present assessment year in consideration in the appeal. Aggrieved, the assessee filed appeal before the Tribunal raising the grounds as reproduced above. 3. At the outset, the Ld. counsel of the assessee submitted that the quantum proceedings by way of which income of the assessee was enhanced in the assessment years 2001-01 to 2006-07 have been restored back by the Tribunal in to 6093/Del/2014 to the file of Assessing Officer for adjudicating afresh in accordance with law. He also submitted that the Tribunal in ITA No. 1530 to 1533/Del/2015 and 1536/Del/2015 for assessment years 2000-01 to 2003-04 and 2006-07 respectively, has set aside the issue of levying of the penalty under section 271(1)(c) of the Act to the file of the Assessing Officer for adjudicating on merit. He, accordingly, requested that issue in dispute in the year under consideration being identical to the issue decided in to 1533/Del/2015 and 1536/Del/2015, may be restored back to the file of the Assessing Officer for deciding on merit.

The Ld. DR could not controvert the fact that issue in dispute involved in the present appeal is identical to the appeals decided by the Tribunal in the case of the assessee for assessment years 2001-01 to 2003-04 and 2006-07 in relation to penalty u/s 271(1)(c) of the Act 5. We have heard the rival submission and perused the relevant material on record. We note that the Ld. CIT(A) has levied penalty under section 271(1)(c) of the Act by way of a combined order for assessment year 2001-01 to 2005-06. The relevant extract of the order of the Ld. CIT(A), relating to levy of the penalty on enhanced income is reproduced as under: “5.7 In this order, penalty is considered only with respect to the sums enhanced by the appeal order dated 30.09.2014, amounting to bogus loans of Rs.6,83,274/- and Rs.7,35,000/- for AY 2003-04 and 2006-07 respectively and bogus interest to the extent of 25% in respect of each AY under consideration. In the appeal order of 30.09.2014, it was held that the sums of Rs.6,83,274/- in AY 2003-04 and Rs.7,35,000/-, in AY 2006-07 claimed as ‘loans/credits’, which had remained to be added by the AO while passing the assessment order on 28.12.2007, constituted unexplained credits; and interest claimed against the bogus loans, were required to be disallowed to the extent of 100% and not 75% as was done by the AO since the loans were bogus in entirety.”

We note that in quantum proceedings, the Tribunal in for assessment year 2000-01, restored the issue to the file of the Assessing Officer observing as under: “24. Thus, in view of above, in the interest of Justice and fair play we are inclined to give one more opportunity to the assessee to raise its points of contentions. Therefore, we’re restoring back the issue to the file of the AO for fresh adjudication as per law and with the direction that he will depute the Inspector of Income Tax to carry out the necessary verification as per the provisions of law. It is needless to mention that the assessee shall extend full cooperation to the Inspector of income tax for carrying out such enquiries. As both ld. AR & DR before us agreed to restore the issue to the file of AO for fresh adjudication as per law, we are not inclined to adjudicate the other issues raised by the assessee on technical basis in addition grounds of appeal. Thus, the ground of appeal of the assessee is allowed for statistical purposes.”

The Tribunal, following the above, has restored the quantum proceedings to the Assessing Officer in other appeals having to 6093/Del/2014 for assessment year 2001- 02 to 2006-07 observing as under: “ 25. Now coming to the remaining appeal i.e. ITA Nos. 6088/Del/14, 6089/Del/14, 6090/Del/14, 6091/Del/14, 6092/Del/2014 & 6093/Del/2014. The issues raised by the assessee are exactly identical to the issue raised in ITA No. 6087/Del/2014, both the Ld. AR and D/R before us agreed whatever view will be taken in ITA No. 6087/Del/2014 would be applied in the instant case. As we have already decided the issue by restoring back to the file of AO for fresh adjudication in accordance to the provisions of law in ITA No. 6087/Del/2014. Therefore, respectfully following the same, we restore the impugned issues raised by the assessee to the file of AO for fresh adjudication in accordance to the provisions of law. Thus, the appeals of the assessee are allowed for the statistical purposes.”

Following the finding in quantum proceedings, the Tribunal in for assessment year 2005-06 restored the levy of penalty under section 271(1)(c) of the Act to the file of the Assessing Officer observing as under: “27. Considering the totality of facts and the arguments advanced before us, we are of the view that even the mandate of Article 265 of Constitution of India only due taxes has to be levied/collected, therefore, we restore the quantum appeal, filed by the assessee, to the Ld. AO for fresh adjudication in accordance with law. Since, the quantum appeals have been restored to the file of the Ld. AO, the penalty appeal is also restored back as the same will be dependent upon the outcome of the quantum appeals, thus, the appeals of the assessee are allowed for statistical purposes. Needless to mention here that due opportunity of being heard be provided to the assessee.”

Similarly, the Tribunal in to 1533/Del/2015 and 1536/Del/2015 has also restored the issue of levy penalty to the file of the Assessing Officer observing as under: “2.1 We have considered the submissions of Ld. DR and perused the material available on record. Without going into much deliberation, we find that some of the appeals of this group were heard on 11.04.2018 and decided vide order dt. 12.04.2018, wherein after making an elaborate discussion, the quantum appeals of the assessee as well as one penalty appeal were set, aside to the file of the Ld. AO with certain directions for fresh adjudication. Since the present appeals are born out of the same facts and belongs to the same assessee, therefore, on similar directions these appeals are also set aside to the file of the Ld. AO to adjudicate on merit. The assessee be given opportunity of being heard. All these appeals of the assessee are allowed for statistical purposes only.”

In the year under consideration, grounds related to levy of penalty are identical to the grounds raised