MRS. SHARMA TYAGI,MUZAFFARNAGAR vs. ITO, MUZAFFARNAGAR

Briefly stated, the facts of the case are that certain additions were made by the Assessing Officer in his order passed u/s 143(3) on 14.12.2011. The assessee preferred appeal before the ld. CIT(A). In such appeal proceedings, it was observed that the difference between the figures of investment in construction of Banquet Hall as per the report of the DVO and approved valuer, was Rs.3,24,467/- for which enhancement was made by the ld. first appellate authority. Pursuant to that, penalty of Rs.1,00,260/- was imposed vide order dated 01.01.2015 in relation to the addition made to the tune of Rs.3,24,467/-. The assessee is aggrieved against the imposition of penalty.

After considering the rival submissions and perusing the relevant material on record, we find that the assessee approached the Tribunal against the enhancement made by the Assessing Officer. Vide order dated 22.08.2017, a copy of which has been placed on record, the Tribunal has remitted the matter to the file of Assessing Officer vide para 8.1 of its order with a direction to apply UP PWD rates for the purpose of ascertaining the cost of construction in investment in construction of banquet hall. Since the matter in quantum proceedings has been restored to the file of the Assessing Officer, we are of the considered opinion that it would be in the fitness of 2

things if the matter concerning the penalty on such amount is also sent back to be decided in conformity with the view taken by the Assessing Officer in the proceedings pursuant to the directions given by the Tribunal. Our view in restoring the penalty to the AO is fortified by the judgment of the Hon’ble Supreme Court in the case of Mohd. Mohatram Farooqui vs. CIT (SC) 2010- TIOL-23-SC-IT in which it has been held that if addition is restored to the AO, then penalty should also be restored. The Hon’ble jurisdictional High Court in Sanjay Gupta vs. CIT (2014) 366 ITR 18 (Del) has also held that where the quantum has been remanded to the AO, the question of penalty on account of the said amount being treated as undisclosed income, should also be remanded to the AO. We, therefore, set aside the impugned order and remit the matter to the file of the AO for determining the question of imposition or otherwise of the penalty on this issue, after the passing of a fresh assessment order on this count. Needless to say, the assessee will be allowed a reasonable opportunity of hearing in this regard.

In the result, the appeal filed by the assessee is allowed for statistical purposes.