ASSISTANT COMMISSIONER OF INCOME TAX, JAIPUR vs. JAIPUR TELECOM PRIVATE LIMITED, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 31/JP/2024 fu/kZkj.k o"kZ@Assessment Years : 2014-15 cuke Assistant Commissioner of Jaipur Telecom Private Vs. Income Tax, Jaipur Limited, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABCJ 0763 D vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Tarun Mittal, CA jktLo dh vksj ls@ Revenue by : Sh. Anoop Singh, Addl. CIT lquokbZ dh rkjh[k@ Date of Hearing : 03/06/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 01/07/2024 vkns'k@ ORDER

PER: RATHOD KAMLESH JAYANTBHAI, AM

The present appeal is because the revenue dissatisfied with the order of the National Faceless Appeal Centre, Delhi dated 04/12/2023 [here in after ‘NFAC’ ] for assessment year 2014-15. The said order of the ld. CIT(A)/ NFAC arises as against the order dated 10.12.2021 passed under section 271(1)(c) of the Income Tax Act, by the National Faceless Assessment Centre [ here in after referred as ld. AO ].

2 ITA No. 31/JP/2024 ACIT vs. Jaipur Telecom Private Limited 2. In this appeal, the revenue has raised following grounds: -

“1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the penalty of Rs. 50,78,834/- u/s 271(1)(c) of IT. Act ignoring the fact that department has filed appeal before Hon’ble High Court against the order dated 15.03.2023 of Hon’ble ITAT and the matter is subjudice?”

the assessee filed return of income for A.Y. 2014-15 on 17.11.2014

declaring total income of Rs.1,42,40,840/-. Assessment u/s. 143(3) of the

Income Tax Act, 1961 (hereinafter referred to as 'the Act') was completed

on 28.12.2016 assessing total income of Rs.1,69,76,200/-. Thereafter, the

Pr.CIT-2, Jaipur passed order u/s. 263 of the Act on 08.03.2019 setting

aside the assessment order directing the assessing officer to verify and

examine the claim made by the assessee regarding computation of book

profit u/s. 115JB and calculation of MAT and finalize the assessment.

Assessment order u/s. 143(3) r.w.s. 263 of the Act was completed on

02.12.2019 determining total income at Rs. 1,69,76,201/- and determining

Book Profit at Rs.3,88,43,584/- Penalty proceedings u/s. 271(1)(c) of the

I.T. Act was initiated by the assessing officer for concealment of particulars

of income. In response to the penalty notice, the assessee vide its

submission dated 28.07.2021 uploaded on ITBA on 29.07.2021 stated that

the assessee has not intentionally escaped any income for A.Y 2014-15

3 ITA No. 31/JP/2024 ACIT vs. Jaipur Telecom Private Limited and the addition was made only due to MAT calculation on sale of fixed

assets which was Tax neutral over the succeeding years by MAT credit.

The assessee requested to drop the penalty proceedings initiated against

the AY 2014-15. The ld. AO noted that the assessee itself included the

income arising on sale of building in its profit & loss account, submitted with

the auditors's report and in the computation of income the assessee

reduced the same amount of Rs.2,66,53,550/- which is not correct and by

this way, the assessee furnished inaccurate particulars of income, hence

penalty u/s. 271(1)(c) of the Act is leviable. He further noted that had the

case not been revised by the Pr.CIT-2, Jaipur, the income taxable to the

extent of Rs. 2,66,53,550/- would not have been taxed in the hands of the

assessee resulting into leakage of revenue for national exchequer. Non

levying penalty on the assessee would lead to an injustice for other honest

taxpayers and there is likely possibility of repetition of offence by the

assessee, in case penalty is not levied. Considering the above discussion,

the ld. AO satisfied this is a fit case for levy of penalty u/s 271(1)(c) of the

Act as the assessee has deliberately furnished inaccurate particulars of

income. As per the provisions of Section 271(1)(c), minimum penalty

leviable is 100 per cent of the tax sought to be evaded and the maximum

penalty leviable is 300 per cent of the tax sought to be evaded.

4 ITA No. 31/JP/2024 ACIT vs. Jaipur Telecom Private Limited Accordingly, a penalty of Rs. 50,78,834/- (being 100% of tax sought to be

evaded) u/s 271(1)(c) of the Income Tax Act, 1961.

preferred an appeal before the ld. CIT(A). The ld. CIT(A) deleted the

penalty levied by holding as under ;

“7. Decision

7.1 In the grounds of appeal, the appellant has contended the action of AO for levying penalty of Rs. 50,78,834/- u/s 271(1)(c) of the Act.

7.2 During the course of appellate proceedings, the appellant has submitted that the appellant preferred an appeal before the Hon’ble ITAT, Jaipur Benches ‘B’, Jaipur against the order passed by the PCIT-2, Jaipur u/s 263 of the Act. The Hon’ble ITAT, Jaipur Benches ‘B’, Jaipur had allowed the appeal in favour of the appellant and disposed off vide order dated 15.03.2023 in ITA No. 274/JPR/2021. The relevant portion of the order i.e Pg 1, Pg 26 & 27 are extracted below: x x x x 7.3 In pursuant to the decision of Hon’ble ITAT, the jurisdictional AO passed the consequential order u/s 254 rws 143(3)/263 of the Act dated 16.06.2023, in which the JAO had determined the income of the appellant at Rs. 1,69,76,200/- as per the original assessment order passed u/s 143(3) of the Act dated 28.12.2016. The copy of consequential order is extracted below for ready reference. x x x x 7.4 In view of the above Hon’ble ITAT decision quashing the order of PCIT-2, Jaipur and consequential Order passed by JAO, the re-assessment order passed u/s 143(3)/263 of the Act dated 02.12.2019 in pursuant to the order of PCIT-02, Jaipur, has become null and void. Further, as seen from the material available on record, the appellant has no pending appeal against the quantum addition made vide order (supra) u/s 143(3) of the Act dated 28.12.2016 and penalty against such aforesaid quantum addition.

5 ITA No. 31/JP/2024 ACIT vs. Jaipur Telecom Private Limited 7.5 Under the given set of facts and circumstances, I am of the considered opinion that since the addition made vide order u/s 143(3) rws 263 of the Act dated 02.12.2019 has been deleted then the penalty levied on such addition has no basis and have no legs to stand on. Accordingly, the AO is hereby directed to delete the penalty of Rs. 50,78,834/- levied vide order u/s 271(1)(c) of the Act. Therefore, the grounds of appeal raised by the appellant are allowed.”

the present appeal on the grounds as stated hereinabove. The ld. DR

representing the revenue submitted that the assessee has not challenged

the order of the assessing officer which is consequent to the order of the ld.

PCIT. So, as the order of the Income Tax Tribunal, is under challenge

before the Hon’ble Rajasthan High Court. Based on this set of facts the

action of the ld. CIT(A) is in not correct. The ld. DR submitted that ld.

CIT(A) has not decided the issue of levy of penalty on its merit and has

merely deleted the penalty based on the facts that the order passed u/s.

263 quashed by the ITAT, cancelling the order of the penalty is not correct.

When the assessee has also not filed any appeal consequent to the order

passed u/s 143(3) read with section 263 of the Act and since the revenue

preferred an appeal before the jurisdictional High Court the order quashing

the levy of penalty being pre-mature or either required to be sustained, or

set aside to be decided on merits. Based on these set of facts the ld. DR

supported the finding of the ld. AO.

6 ITA No. 31/JP/2024 ACIT vs. Jaipur Telecom Private Limited 6. Per contra, the ld. AR representing the case of the assessee, heavily

relied upon the reasoned finding of the ld. CIT(A). The ld. AR of the

assessee also submitted that though the revenue has challenged the order

of the ITAT but since there is no stay or till the hearing of this appeal

revenue could not bring on record any contrary material. So, the finding of

ld. CIT(A) is based on the set of facts discussed in his order is required to

be sustained. The ld. AR of the assessee filed a detailed event chart stating

as to why the order of the ld. CIT(A) is required to be sustained. The chart

of event filed by the assessee reads as under :

S. Particulars Date of APB No order 1. 28.12.2016 01-07 Assessment Order passed u/s 143(3) of the Income Tax Act, 1961

Tribunal 15.03.2023 19-45 7 Order of Hon'ble Income Tax Appellate challenging the order u/s 263 of the Income Tax Act, 1961 dated 08.03.2019

7 ITA No. 31/JP/2024 ACIT vs. Jaipur Telecom Private Limited

8 Order u/s 254 r.w.s 143(3)/263 of the Income Tax Act, 1961 giving 16.06.2023 effect of Hon’ble ITAT order dated 15.03.2023

9 Order of Ld. CIT(A) against the Penalty Order passed u/s 271(1)(c) of 04.12.2023 the Income Tax Act, 1961 dated 10.12.2021

of the assessee also supported the order of the ld. CIT(A) by filling the

following written submission:

“Brief facts of the case are that assessee is a private limited company and in engaged in the business of lease rental and real estate development. Return of Income for the year under consideration was filed on 17.11.2014 declaring total income of Rs. 1,42,40,840/-. Case of assessee was selected for scrutiny assessment, which was completed vide order dated 28.12.2016 passed u/s 143(3), whereby total income of assessee was assessed at Rs. 1,69,76,200/-. Thereafter, ld. PCIT (admn.) revised assessment vide order dated 08.03.2019 passed u/s 263 of the Income Tax Act. An appeal was preferred by assessee, before Hon'ble ITAT against order so passed by ld. PCIT, which was decided by this hon'ble bench vide order dated 15.03.2023 passed in ITA No. 274/JPR/2021, whereby order passed u/s 263 was quashed.

It is submitted that during the pendency of appeal before hon'ble ITAT, Id.AO had completed proceedings u/s 143(3) r.w.s.263 and had also levied penalty of Rs. 50,78,834/- u/s 271(1)(c) of the Income Tax Act. Aggrieved of penalty so imposed, assessee preferred appeal before ld. CIT(A). By the time, case was fixed for hearing before ld. CIT(A), Hon'ble ITAT had already quashed order u/s 263, and Id.AO had passed order u/s 254 r.w.s.143(3)/263 of the Income Tax Act, wherein Total income of assessee was determined at Rs.1,69,76,200/-, i.e. at income originally assessed. Therefore ld. CIT(A), vide order dated 04.12.2023 deleted the penalty imposed by ld. AO.

Now, department has preferred appeal against order so passed by ld. CIT(A). The only ground of appeal raised by the department reads as under:

8 ITA No. 31/JP/2024 ACIT vs. Jaipur Telecom Private Limited

"Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) is justified in deleting the penalty of Rs.50,78,834/- u/s 271(1)(c)of L.T. Act ignoring the fact that department has filed appeal before Hon'ble High Court against the order dated 15.3.2023 of Hon'ble ITAT and the matter is subjudice?"

Your honours would appreciate that order passed by Hon'ble ITAT is binding on revenue authorities including Commissioner of Income Tax (Appeals) unless operation of the same is stayed by Hon'ble High Court (which is not the case here). Moreover, ld.AO himself has recomputed income of assessee in order 254 r.w.s.143/263 of the Income Tax Act, which implies that additions made vide such orders stood deleted. It is submitted that once Revision order u/s 263 itself is quashed and order passed u/s 143(3) r.w.s.263 (whereby penalty was initiated) has been modified by ld.AO to give effect to the order of Hon'ble ITAT, penalty order passed u/s 271(1)(c) loses its very foundation and penalty initiated vide such order also has no basis to stand. In such circumstances, Id. CIT(A) has rightly deleted the penalty, which was initiated vide order passed u/s 143(3) r.w.s.263.

In view of above, it is also submitted that since appeal filed by the department (against 263 order) before Hon'ble High Court has not been decided so far, order passed by this Hon'ble ITAT is operative and has been rightly relied upon by ld. CIT(A) while deleting penalty. It is therefore requested that order so passed by ld. CIT(A) deserves to be upheld.”

was placed on the following evidence / records / decisions:

PAGE PARTICULARS S. No. NOS.

Copy of Assessment order passed u/s 143(3) of the IT Act,1961 dated 01-07 1. 28.12.2016 Copy of Order u/s 271(1)(c) of the Income Tax Act , 1961 dated 26.03.2019 in 08-09 2 consequence to assessment order passed u/s 143(3) dated 28.12.2016 10-15 Copy of order u/s 263 of the Income Tax Act, 1961 dated 08.03.2019. 3.

9 ITA No. 31/JP/2024 ACIT vs. Jaipur Telecom Private Limited

Copy of Assessment order passed u/s 143(3)/263 of the IT Act,1961 dated 16-18 4. 02.12.2019 Copy of order of Hon'ble Income Tax Appellate Tribunal, Jaipur Bench, Jaipur in the case of assessee (M/s Jaipur Telecom Pvt. Ltd.) dated 15.03.2023 challenging 19-45 5. the order u/s 263 of the Income Tax Act, 1961 dated 08.03.2019

authorities as favorable to them.

available on record. The bench noted that the order of penalty which is

under challenge is passed consequent to an order passed u/s 143(3) of

section 263 of the Act. In the meanwhile, the assessee challenged the order

of the PCIT in an appeal before the ITAT, Jaipur Bench. In that appeal the

order of ld. PCIT passed u/s 263 of the Act was quashed by the ITAT. In

appreciation of these set of facts the consequential assessment order

passed is not sustainable and as such when the very basis for levy of

penalty, which is the assessment order in this case is not sustainable the

consequent levy of penalty has not leg to stand. The ld. CIT(A) in

appreciation of this factual aspect of the matter quashed the order of the ld.

AO levying the penalty. On being asked to ld. DR on the aspect of the

10 ITA No. 31/JP/2024 ACIT vs. Jaipur Telecom Private Limited matter that whether any stay is granted or any order passed against the

appeal so filed by the revenue from the High Court? The ld. DR fairly

admitted the fact “he is not aware about any stay or consequential order

after filing the appeal. Thus, the facts mentioned in the order of the ld.

CIT(A) becomes final that the order for levying the penalty consequent to

order passed u/s. 143(3) r.w.s. 263 has been quashed and thereby the

order of the penalty has no leg to stand. Even the jurisdictional assessing

officer passed the consequential order u/s 254 r.w.s. 143(3)/263 of the Act

dated 16.06.2023, in which the JAO had determined the income of the

appellant at Rs. 1,69,76,200/- as per the original assessment order passed

u/s 143(3) of the Act dated 28.12.2016. The copy of consequential order

placed on record by the assessee. In the light of these facts we note that

the very basis for levy of penalty is the quantum proceeding order which

arises on account of order passed u/s. 143(3) r.w.s. 263 is quashed by the

ITAT 08.03.2019. Thus, the consequential levy of penalty also has no leg to

stand and the same has rightly been quashed by the ld. CIT(A). Based on

these set of facts discussed we do not find any infirmity in the order of the

ld. CIT(A) and therefore, the ground upon which this appeal is filed by the

revenue devoid of merit and therefore, the same is dismissed.

11 ITA No. 31/JP/2024 ACIT vs. Jaipur Telecom Private Limited In the result, the appeal of the revenue is dismissed.

Order pronounced in the open court on 01/07/2024.

Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur fnukad@Dated:- 01/07/2024 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Assistant Commissioner of Income Tax, Jaipur 2. izR;FkhZ@ The Respondent- Jaipur Telecom Private Limited, Jaipur vk;dj vk;qDr@ The ld CIT 3. vk;dj vk;qDr¼vihy½@The ld CIT(A) 4. 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File (ITA No. 31/JP/2024) vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत