PRIORITY JEWELS PRIVATE LIMITED,MUMBAI vs. COMMISSIONER OF INCOME TAX (A), APPEALS

ITA 3196/MUM/2024Status: DisposedITAT Mumbai12 August 202413 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty imposed was not sustainable on legal grounds. Firstly, regarding the procedural aspect, while the assessee raised a ground about the lack of opportunity of hearing, the judgment focuses on the substantive issue of the penalty's validity. Secondly, concerning the penalty under section 271(1)(c), the Tribunal noted that the Assessing Officer had issued the notice without mentioning the specific limb (concealment of income or furnishing inaccurate particulars) and that this defect was also present in the assessment order. The Tribunal found that the issue was entirely legal and had been decided by the Hon’ble Jurisdictional High Court in Mohammed Farhan A Shaikh (supra). The Tribunal also referred to the decision in CIT V/s SAS’s Emerald Meadows, where the Special Leave Petition (SLP) filed by the department was dismissed by the Hon’ble Supreme Court. Following these judicial precedents, the Tribunal concluded that the penalty notice and the assessment order lacked specificity regarding the offense, and therefore, the impugned penalty was not sustainable. Consequently, the penalty was deleted, and the appeal of the assessee was allowed.

What were the facts?

The assessee, Priority Jewels Private Limited, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Mumbai Bench 'C', against the order of the National Faceless Appeals Centre (NFAC), Delhi, dated April 16, 2024. This order was passed under section 250 of the Income-tax Act, 1961, and emanated from an order of the Deputy Commissioner of Income-tax, Circle 10(3)(2), Mumbai, dated July 31, 2018, passed under section 271(1)(c) of the Act. The assessment year in question is 2012-13. The assessee's appeal challenges the NFAC's order on two main grounds: procedural irregularities in the appeal proceedings and the confirmation of a time-barred penalty order passed by the Assessing Officer (AO).

What were the issues?

The Tribunal had to decide the following questions: 1. Whether the Learned CIT(A) erred in not following the procedure narrated under section 250 of the Income Tax Act, 1961, specifically by not providing an opportunity of being heard to the appellant, thereby violating principles of natural justice and invalidating the appellate order. - Assessee's contention: The Learned CIT(A) failed to provide an opportunity of being heard, as mandated by section 250, rendering the order invalid. Evidence from the Income Tax Portal was presented to support this claim. - Revenue's contention: Not recorded. 2. Whether the Learned CIT(A) erred in confirming the time-barred penalty order passed by the learned AO under section 271(1)(c) of the Act by violating the conditions stipulated in section 275 of the Act. - Assessee's contention: The penalty order dated July 31, 2018, was barred by limitation as per section 275 of the Act. The notice issued by the AO under section 271(1)(c) also did not specify the limb under which the penalty was initiated, relying on the decision in Mohammed Farhan A Shaikh vs DCIT (2021) 434 ITR 1 (Bom [FB]). - Revenue's contention: Relied on the judgment of the Hon’ble Supreme Court in State Bank of Patiala & Ors vs S.K. Sharma, AIR 1996 SUPREME COURT 1669.

Which sections of the Income-tax Act were involved?

Section 250,Section 271(1)(c),Section 274,Section 275

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI

Before: SHRI B.R. BASKARAN & SHRI ANIKESH BANERJEE

PER ANIKESH BANERJEE, J.M:

Shri R.K. Sinha Shri Yogendra T Wakare(Sr. DR)

08/08/2024 12/08/2024

Instant appeal of the assessee was filed against the order of theLearned

National Faceless Appeals (NFAC), Delhi [for brevity, ‘Ld.CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), for Assessment Year

2012-13, date of order16.04.2024. The impugned order was emanated from the order of the Deputy Commissioner of Income-tax, Circle 10(3)(2), Mumbai (the Ld.AO) passed under section 271(1)(c) of the Act, dt of order 31/07/2018. 2. The assessee has taken the following grounds of appeal: -

“Being aggrieved by

The order continues below.

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