MAGAL CREATION P. LTD,MUMBAI vs. ACIT 4(2), MUMBAI

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ITA 3580/MUM/2016Status: DisposedITAT Mumbai10 July 2018AY 2006-074 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that once the assessment order is set aside and the matter is remanded, the penalty levied on that issue will not survive. Therefore, the penalty was deleted.

What were the facts?

The assessee's appeal arose from a penalty levied under section 271(1)(c) for concealment of income. The quantum appeal for the same assessment year had been remanded back to the AO for fresh consideration.

What were the issues?

Whether penalty under section 271(1)(c) can survive when the underlying assessment issue has been remanded back to the AO for fresh adjudication.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 156

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

For Appellant: Shri none
For Respondent: Shri V. Vidhyadhar, DR

This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-9, Mumbai, [in short CIT(A)] in appeal No. CIT(A)-9/Cir.4/290/2014-15 dated 16.03.2016. The Assessment was framed by the Addl. Commissioner of Income Tax, Circle-4(1), Mumbai (in short Addl. CIT/ AO) for the assessment year 2006-07 order dated 10.12.2008 under section 143(3) of the Income Tax Act, 1961(hereinafter ‘the Act’). The penalty was levied by ACIT vide order dated 25.03.2011under section 271(1)(c) of the

2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the levy of penalty by the AO under section 271(1)(c) of the Act for concealment of income. For this assessee has raised the following grounds: -

“1. On the facts and in the circumstances of the case and in law, The CIT (A)-9, hereinafter to as the L.d. AO. has confirmed in levying a penalty of Rs.26,12658/- u/s 271 (1)(c) for concealment of income The Said penalty may please be deleted.

2.

On the Facts and in the circumstances of the case and in law, the penalty order u/s 271(1) (C) is void as the same is served to the appellant after the completion of the time limit. As Such the said order may please be treated as null and void ab initio.

3. On the facts and in the circumstances of the case and in law. Original demand notice issued u/s156 of the I.T. Act, is without the signature of AO, thus rendering it a null and documents, and thus cannot be considered as valid document.”

3.

At the outset, the learned Sr. Departmental Representative fairly stated that the Tribunal while deciding the quantum appeal vide appeal No. 2562/Mum/2010 for AY 2006-07 dated 03.05.2016 as set aside the issue of foreign agent’s commission vide Para 10 reads as under: -

“10.Keeping in view the ratio discussed above, we decide it appropriate to restore this issue to the file of AO to pass appropriate order in term of ITAT order in Khimji / Visram & Sons vs. ACIT reported in (2014) 52 taxntann.com 485 (Mumbai.Trib.), hence, this ground of appeal is statistically allowed in favour of the assessee.”

4.

The learned Sr. Departmental Representative fairly stated that once the issue is remanded back to the file of the AO, penalty is to be set aside. None is present from the assessee’s side.

5.

We have heard the rival contentions and gone through the facts and circumstances of the case. Admittedly, the Tribunal has remanded the matter back regarding the issue of foreign agents commission to the file of the AO for deciding the issue denovo. Once, the assessment order is set aside and matter is remanded back to the file of the AO, the penalty levied by the AO and confirmed by the CIT(A) on this very issue will not survive. Accordingly, the penalty is deleted. However, we want to make it clear that in case the AO during the course set aside assessment proceedings comes to the conclusion that there is concealment of income on account of furnishing of inaccurate particulars of income or concealment of particulars of income as envisage in the provisions of 271(1)(c) of the Act, the AO is free to re-initiated the penalty proceedings. Accordingly, this appeal of assessee is allowed. 6. In the result, the appeal assessee is allowed. Order pronounced in the open court on 10-07-2018.

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