JAYANTILAL C. JAIN,MUMBAI vs. ITO 15(1)(1), MUMBAI

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ITA 5488/MUM/2015Status: DisposedITAT Mumbai07 March 2017AY 2004-054 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that since most of the additions leading to the penalty were restored to the AO for fresh examination, the penalty issue also needed to be considered afresh by the AO after the merits are adjudicated.

What were the facts?

The assessee's appeal against a penalty order was heard. The quantum appeal's issues had been set aside or restored to the Assessing Officer (AO) for fresh examination by the ITAT. A small ad hoc disallowance was confirmed in favour of the revenue.

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the additions leading to the penalty have been set aside or restored for fresh adjudication.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, MUMBAI

Before: SHRI SHAMIM YAHYA & SHRI RAVISH SOOD

For Appellant: Shri. Darshan Gandi
For Respondent: Shri. Rajesh Kumar Yadav

This appeal by the assessee is directed against order of learned CIT-A dated 22/6/2015 wherein he has confirmed the levy of penalty of Rs.2,06,993/- u/s. 271 (1) C of the income tax act, which pertains to assessment year 2004-05 2. At the outset in this case learned counsel of the assessee submitted that the issue in the quantum appeal has been set aside Jayantilal C. Jain ITA no.5488/Mum./2015 by the ITAT. Hence he pleaded that this penalty order also needs to be set aside. Per Contra learned departmental representative submitted that a part of the issues which led to the levy of penalty has also been confirmed by the ITAT. Hence he submitted that the entire penalty need not be set aside. In rejoinder Ld. Counsel of the assessee submitted that the issue on which ITAT has confirmed the addition only relates to adhoc /estimated addition which doesn't warrant levy of penalty.

3.

Up on careful consideration we note that this ITAT in and others void order dated 27/4/2016, has adjudicated the merits of the issues on which penalty was levied. We find that a major part of the addition related to addition under section 68 of the income tax act. The amount involved was Rs.6,06,600/- being unsecured loan and Rs. 27,109/- interest thereon. While adjudicating this issue ITAT had restored the issue to the file of the assessing officer for fresh examination. Another issue on which the penalty was levied related to ad hoc disallowance of telephone expense amounting to Rs. 2,385. This issue was decided by the ITAT in favour of the revenue. On this issue it is the contention of the Ld. Counsel of the assessee that since the issue relates to ad hoc disallowance assessee cannot be held guilty of concealment or furnishing of inaccurate particulars.

4.

Up on careful consideration we find that except for the issue of ad hoc disallowance of Rs. 2,385/- the ITAT has restored the issues to the file of the assessing officer for fresh examination. In these circumstances in Jayantilal C. Jain ITA no.5488/Mum./2015 our considered opinion the issue relating levy of penalty also needs to be considered afresh by the assessing officer after adjudication up on the merits as restored by the ITAT in the order on merits as referred above. Accordingly, the issue raised in this appeal is remitted to the file of the assessing officer. The assessing officer shall consider the issue of levy of penalty afresh after adjudication up-on the merits of the issue as remitted above.

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