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Income Tax Appellate Tribunal, DELHI BENCH ‘F’ NEW DELHI
Before: SHRI I.C. SUDHIR & SHRI L.P. SAHU
ORDER
Per L.P. Sahu, Accountant Member:
This is an appeal filed by the assessee against the order dated 25.02.2011 of CIT(A)-XXI, New Delhi for the assessment year 1999-2000 on the following grounds : “01 On the facts and circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in confirming penalty of Rs. 585023/- levied under section 271 (1 )(c) of the Act by the Assessing Officer. Provisions of the Act ought to have been properly construed and regard being had to facts of the case said penalty of Rs. 585023/-should not have been confirmed. Reasons assigned by him are wrong and insufficient to justify levying of penalty of Rs. 585023/- under section 271 (1)(c) of the Act 02 On the facts and circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in confirming conclusion arrived at by the learned Assessing Officer that the appellant has concealed the particulars of income and thereby levying penalty of Rs. 585023/- under section 271(1)(c) of the Act. Provisions of the Act ought to have been properly construed and regard being had to facts of the case the learned Commissioner of Income Tax (Appeals) ought not to have confirmed the conclusion arrived at that the appellant has concealed the particulars of income. Reasons assigned by him are wrong and insufficient to support such conclusion. 03 The order made under section 271(1)(c) of the Act by the learned Assessing Officer and confirmed by the learned Commissioner of Income tax (Appeals) is illegal, bad-in-law and contrary to the provisions of the Act in as much as the prior approval of the Joint Commissioner of Income Tax under section 274 of the Act has not been obtained before levying penalty which is in excess of Rs. twenty thousand. 04 The order made under section 271(1)(c) of the Act by the learned Assessing Officer and confirmed by the learned Commissioner of Income tax (Appeals) is illegal, bad-in-law, ultra virus and without allowing reasonable opportunity of the hearing, and without appreciating the facts, submission and evidences in their proper perspective and is liable to be annulled.”
2. The brief facts of the case are that the assessee filed return of income and case was selected for scrutiny. Assessment was completed u/s. 143(3) of the IT Act, 1961. Later on, the case was reopened and reassessment was completed u/s. 143(3)/147 of the Act. The AO noticed that a sum of Rs.16,71,494/- on account of Excise Duty on finished goods lying in the closing stock was not added in the value of closing stock. In this regard the assessee had stated that a sum of Rs.15,73,846/- was paid upto December, 1999 by way of availment of Modvat credit. The assessee furnished copies of RG-23A part II and RG-23C part II for the succeeding year. As per the above details, the amount of Rs.7,38,508/- including opening balance of Modvat credit receivable of Rs.2,59,183/- as per GR-23A part II and further a sum of Rs.8,35,338/- including opening balance of Rs.3,87,419/- as Modvat credit receivable as per RG-23C part-II, have been considered to arrive at the figure of Modvat credit availment of Rs.15,73,846/-. The appellant has credited a sum of Rs.1,03,097/- as per RG-23A part-II and a sum of Rs.4,23,058/- as per RG-23C, part-II from 01.04.1999 to 31.12.1999 (up to the date of filing of return) for Modvat receivable amount on account of clearance of goods/cess. Accordingly, the ld. Assessing Officer calculated eligible amount for deduction u/s. 43B at Rs.5,23,155/- and not Rs.15,73,846/- as claimed by the assessee. Therefore, the Assessing Officer disallowed claim of the assessee for Rs.16,71,494/-. Aggrieved by this order, the assessee preferred appeal before the ld.CIT(A) who confirmed the action of the AO. The assessing Officer initiated penalty proceedings after issuing notice u/s. 271(1)(c) read with section 274(1) of the IT Act. The appellant did not appear before the Assessing Officer. The hearing was fixed on 20.03.2009 & 25.03.2009, neither the appellant filed any written submission. Ultimately, the Assessing Officer passed penalty order on 31.03.2009 imposing penalty of Rs.5,85,023/- u/s. 271(1)(c) of the Act. Aggrieved by the order of penalty, the assessee preferred appeal before the ld. CIT(A) who confirmed the order of the AO.
The ld. AR at the outset addressed the ground No. 3 of appeal wherein he has challenged the penalty order on the legal contentions that no approval has been obtained by the AO u/s. 274(2)(b) of the Act from JCIT before passing the penalty order. Therefore, the penalty order passed and confirmed by CIT(A) is contrary to law and is liable to be quashed.
The ld. DR relied on the order of the ld. Authorities below.
After hearing both the parties and perusing the material on record, we find that the orders of the authorities below nowhere speak that any approval was obtained by the Assessing Officer before imposing penalty, as contemplated u/s. 274(2)(b) of the IT Act, which is necessary for imposing penalty exceeding Rs.20,000/-. The assessee has raised before us this legal objection, which the ld. DR failed to rebut. We accordingly are inclined to accept the stand of the assessee that the penalty order passed by AO and confirmed by ld. CIT(A) is full of legal flaw and is contrary to law. Accordingly, the appeal of the assessee has merit on this ground and is fit to be allowed.
Once the penalty proceedings stand quashed on legal ground, therefore, we need not to enter into other grounds of appeal raised by the assessee on merits of penalty.