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Facts
The assessee challenged a penalty order and the CIT(A)'s dismissal of their appeal. The penalty was levied under Section 271(1)(c) read with Section 143(3) of the Income Tax Act, 1961. The original assessment order, which led to the penalty, was later set aside by the Tribunal.
Held
The Tribunal held that the penalty proceedings cannot survive if the assessment order on which it is based has been set aside. Since the addition made in the assessment order for AY 2011-12 was set aside by a previous Tribunal order, the penalty levied on that basis is unsustainable.
Key Issues
Whether penalty under Section 271(1)(c) can be sustained when the assessment order, on which it is based, has been set aside by the Tribunal.
Sections Cited
271(1)(c), 143(3)
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Income Tax Appellate Tribunal, G BENCH, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL "G" BENCH, MUMBAI SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER Stillwater Defence Textile Technologies B/22 Petit Mansion, 95, Sleater Road, Mumbai – 400 007 [PAN: AADCC6835B] …………. Appellant Vs Assistant Commissioner of Income Tax - Circle 1(3)(1), RoomNo.1810A, …………. Respondent 18th Floor, Air India Building, Nariman Point, Mumbai- 400 021 Appearance For the Appellant/Assessee : Shri Swapnil Newaskar For the Respondent/Department : Shri Avinash Baburao Karpe Date Conclusion of hearing : 18.06.2024 Pronouncement of order : 27.08.2024 O R D E R Per Rahul Chaudhary, Judicial Member: 1. By way of the present appeal the Assessee has challenged the order dated 23/02/2024, passed by the National Faceless Appeal Centre (NFAC), Delhi, [hereinafter referred to as the „CIT(A)’ ] dismissing the appeal of the Assessee against the Penalty Order, dated 29/03/2019, levying penalty of INR 6,16,829/-passed by the Commissioner of Income Tax (Appeals) under Section 143(3) read with section 271(1)( c) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟).
When the Appeal was taken up for hearing, Learned Authorised Representative for the Assessee pressed into service Ground Numbers 1 to 3 raised in the present appeal which reads as Assessment Year: 2014-15 under: “1. The Ld. Commissioner of Income Tax Appeal has failed to appreciate in law On the facts and circumstances the learned ACIT has erred in levy u/s. 271 (1) (c). Such penalty can be levied only in case of concealment of income and furnishing inaccurate details. In our case, there was no intentional concealment of income and furnishing inaccurate details In our case there was no intentional concealment of income. It was a bonafide error and so penalty cannot be levied on it. 2. Order of Fresh Assessment is still pending, the previous orders passed by the Ld. A.O. dated 29/12/2016 for assessment and impugned Penalty order dated 29/03/2019 issued pursuant to old assessment order stands nullity as the effect of Order dated 23/12/2022 passed by The Hon'ble Income Tax Appellate Tribunal, Mumbai in the matter of appeal preferred by the present appellant 3. The continuance of penalty pursuant to old orders which are not effective as on date is without any jurisdiction and penalty proceeding may start as fresh only after fresh assessment will resulted against the Assessee.”
The facts as emanating from the record are that for the Assessment Year 2011-12, assessment was framed on the Assessee under Section 143(3) of the Act, vide assessment order, dated 29/12/2016, on assessed income of INR 1,77,01,740/- after making an addition of INR 1,77,01,740/- in respect of share premium received by the Appellant during the relevant previous year. The appeal preferred by Assessee the against the aforesaid assessment order was dismissed by CIT(A) vide order, dated 8/12/2017. Therefore, the Assessee preferred appeal before the Tribunal. Vide Order, dated 23/12/2022, passed in ITA/1238/MUM/2021, the Tribunal had set aside the issue back to the file of the Assessing Officer, thus, setting aside the aforesaid addition made by the Assessing Officer. 4. Before us it was contended by the Learned Authorised Representative for the Assessee that continuation of Penalty proceedings and levy of penalty under Section 271(1)(c) of the Act pursuant to the Assessment order, Order 29/12/2016, which 2 Assessment Year: 2014-15 has since been set aside by Order, dated 23/12/2022, passed by the Tribunal in ITA 1238/MUM/2021, can no longer survive. It was submitted that the penalty proceedings may start afresh only after the fresh assessment is framed on the Assessee in terms of the directions issued by the Tribunal in the first round of litigation.
On perusal of record we find that the penalty under Section 271(1)(c) of the Act has been levied by the Assessing Officer, vide Penalty Order, dated 29/3/2019, after taking note of the fact that appeal preferred by the Assessee against the Assessment Order, dated 29/12/2016 was dismissed by the CIT(A), vide Order, dated 08/12/2017. On perusal of the order, dated 23/12/2022, passed by the Tribunal in we find that the Tribunal has set aside the addition. Accordingly, we find merit in the contention of the Assessee that penalty levied on the Assessee, vide order, dated 29/03/2019, passed under Section 271(1)(c) of the Act, cannot be sustained. Accordingly, penalty of INR 60,16,821/- levied on the Assessee under Section 271(1)(c) of the Act is deleted and Ground No. 1 to 3 raised by the Appellant are allowed, while rest of the grounds raised by the Assessee are dismissed as having been rendered infructuous.