DCIT CEN CIR 4(1) CEN RG 4, MUMBAI vs. UNIQUE ESTATE DEVELOPMENT CO.LTD, MUMBAI

This appeal has been filed by the revenue against order dated 28.10.2015 passed by the Ld. Commissioner of Income Tax (Appeals)-52, Mumbai, for the assessment year 2009-10, whereby the Ld. CIT (A) has allowed the appeal filed by the assessee against penalty order passed u/s 271 (1) (c) of the Income Tax Act, 1961 (for short ‘the Act’) and deleted the penalty.

Brief facts of the case are that the assessee company engaged in the business of construction, filed its return of income for the relevant assessment year declaring the total loss of Rs. 3,33,83,943/- and paid tax on book profit of Rs. 6,78,32,384/-. The case was selected for scrutiny and notice u/s 142 (1) was issued to the assessee. In response thereof the authorized representative of the assessee appeared before the AO and furnished requisite details. After verification of the evidence adduced by the assessee, the AO passed 2 Assessment Year: 2009-10 assessment order u/s 143 (3) of the Act determining the total income under the normal provision of Act at Rs. 26,13,320/- and under section 115JB at Rs. 69,72,070/-. The assessee preferred an appeal before the CIT (A) against the said assessment order. The Ld. CIT(A) dismissed the assessee’s appeal. The assessee challenged the said order before the ITAT. The ITAT discussing the decisions rendered in the assessee’s case for the earlier years observed that the facts of the assessee’s case have not been examined in the light of the various judgments. The Tribunal accordingly send the issue back to the file of AO for fresh adjudication of the issue with the direction to decide the issue taking into consideration the judgments passed by the Hon’ble Supreme Court, the Hon’ble Kolkata High Court and other decisions of various Benches of the Tribunal. Accordingly, the AO passed the assessment order u/s 143 (3) read with section 254 of the Act determining the total income of the assessee at Rs. 3,26,03,930/-. In the meantime demand notice was issued and penalty proceedings u/s 271 (1) (c) of the Act was initiated. After hearing the assessee, the AO imposed penalty of Rs. 1,22,35,469/- i.e. 100% of the total tax to be evaded for furnishing inaccurate particulars of income. The assessee challenged the penalty order passed by the AO before the CIT (A). The Ld. CIT (A) after hearing the assessee allowed the appeal and directed the AO to delete the penalty. The present appeal has been filed by the revenue against the impugned order passed by the Ld. CIT (A).

The revenue has preferred this appeal before the Tribunal on the following effective ground:-

At the very outset, the Ld. Departmental Representative (DR) submitted that the Ld. CIT (A) has allowed the appeal of the assessee filed 3 Assessment Year: 2009-10 against the penalty order passed by the AO on the basis of demand raised as per the original assessment order, whereas in the present case the ITAT has set aside the order passed by the Ld. CIT (A) to the file of AO for fresh adjudication. In pursuance of the ITAT order the AO has passed assessment order u/s 143 (3) read with section 254 of the Act. In the light of the said facts, the appellate order passed by the Ld.CIT (A) is liable to be set aside. Hence, the AO is supposed to pass penalty order afresh on the basis of the order giving effect to the ITAT order. The Ld. counsel for the assessee did not controvert the facts submitted by the Ld. DR.

We notice that the assessee challenged the assessment order initially passed by the AO before the Ld. CIT (A) inter alia on the ground that AO has wrongly treated the income of Rs. 12,49,82,881/-earned form Infinity Mall as income from House property as against the business income claimed by the assessee and the Ld. CIT (A) affirmed the assessment order passed by the AO. In the second appeal, the coordinate Bench of the ITAT sent back the issue to the file of AO for fresh adjudication with the direction to decide the issue afresh in the light of the judgment passed by the Hon’ble Supreme Court in the case of Chennai Properties and Investment Pvt. Ltd. vs. CIT, 373 ITR 673 and other decisions of the various Benches of the Tribunal relied upon by the assessee. Now the AO has passed order u/s 143 (3) read with section 254 of the Act and determined the total taxable income of the assessee at Rs. 3,26,03,930/-. Since, the amounts of tax sought to be evaded and the amount as per the assessment order passed u/s 143 (3) and as per the order giving effect to the ITAT order are different, the impugned order passed by the Ld. CIT (A) does not survive. If the penalty proceedings is required to be initiated it can be initiated as per the assessment order passed u/s 143 (3) read with section 254 of the Act. Hence, we set aside 4 Assessment Year: 2009-10 the penalty order passed by the Ld. CIT (A) the file of AO to initiate penalty proceedings afresh, if required, as per the assessment order passed giving effect to the ITAT order aforesaid. The appeal is disposed of accordingly.