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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 14TH DAY OF JUNE, 2021
PRESENT
THE HON'BLE MR. JUSTICE SATISH CHANDRA SHARMA
AND
THE HON'BLE MR. JUSTICE NATARAJ RANGASWAMY
I.T.A. NO.353 OF 2019
BETWEEN:
M/S JAYSONS INFRASTRUCTURE INDIA PVT. LTD, REP. BY ITS MANAGING DIRECTOR, SRI. V.M.VIJAYRAMU PRESENTLY AT NO.2, CHAMPAKA MANSION, NATIONAL HIGH SCHOOL ROAD, V.V.PURAM, BANGALORE-560004 PAN:AACCJ2951N ...APPELLANT
(BY SRI. CHANDRASHEKHAR V., ADVOCATE)
AND:
THE INCOME TAX OFFICER, WARD 11(2), PRESENTLY WARD – 4(1)(1), BMTC BUILDING, 6TH BLOCK, KORAMANGALA, BENGALURU-560095. …RESPONDENT
(BY SRI SANMATHI E.I., ADVOCATE)
THIS APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961, ARISING OUT OF THE ORDER DATED: 09.06.2017 PASSED IN ITA NO.997/BANG/2015, FOR THE ASSESSMENT YEAR 2010-2011 PRAYING THIS HON`BLE COURT TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED ABOVE AND ANSWER THE SAME IN FAVOUR OF THE APPELLANT AND TO ALLOW THE APPEAL AND SET ASIDE THE FINDINGS TO THE EXTENT AGAINST THE APPELLANT IN THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE ‘B’ BENCH IN ITA NO.997/BANG/2015 DATED: 09.06.2017 FOR THE ASSESSMENT YEAR 2010-2011 (ANNEXURE-A).
THIS APPEAL HAVING BEEN HEARD AND RESERVED ON 07.06.2021, COMING ON FOR ‘PRONOUNCEMENT OF JUDGMENT’ THIS DAY, NATARAJ RANGASWAMY J., DELIVERED THE FOLLOWING:
J U D G M E N T
In this appeal filed under Section 260A of the Income Tax Act, 1961, the appellant has challenged the order of penalty under Section 271(1)(c) of the Income Tax Act, 1961 passed by the Assessing Officer in respect of the Assessment Year 2010-11, which was confirmed by the Commissioner of Income Tax (Appeals) in Appeal No.18/278/W/4(1)(1)/CIT(A)-4/2013-14, which was again confirmed by the Income Tax Appellate Tribunal, Bengaluru Bench ‘B’, Bengaluru in I.T.A. No.997/Bang/2015.
Briefly stated, the facts are that the appellant had filed its return of income for the assessment year 2010-11 and reported nil income and claimed deduction of Rs.1,49,36,776/- under Section 80IA of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ for short). The appellant was selected for scrutiny under CASS. The Assessing Officer called for details and thereafter passed an order of assessment under Section 143(3) of the Act and determined the total income of the appellant at Rs.1,49,36,776/-. The deduction claimed by the appellant under Section 80IA of the Act was denied on the ground that the appellant had not developed or operated any infrastructure project. Since the appellant did not prefer an appeal against the order of assessment, the Assessing Officer passed an order of penalty under Section 271(1)(c) of the Act and raised a demand of Rs.50,77,009/- as penalty.
Feeling aggrieved by the order of penalty, the appellant filed an appeal before the Commissioner of
Income Tax (Appeals) seeking deletion of the penalty imposed. The CIT (Appeals) dismissed the appeal and confirmed the order of penalty in terms of the order dated 30.01.2015.
When thing stood thus, the order of assessment was selected for revision under Section 263 of the Act by the Principal Commissioner of Income Tax. The order of assessment was set aside by the Principal Commissioner of Income Tax in case No.F.No.9/263/PCIT- 4/2014-15/1(09/03) and the case was remitted back to the Assessing Officer to pass a fresh assessment order after examining the issue raised. The appellant has therefore contended that when once the order of assessment is set aside, the question of imposing any penalty under Section 271(1)(c) of the Act would not arise.
Notice of this appeal was issued and the respondents are represented. This appeal was admitted to consider the following question of law:
“1. Whether the Tribunal was justified in passing the order dismissing the penalty appeal, without appreciating that the appellant has brought to the attention of the Tribunal that the penalty order was non est, since the quantum order itself was set aside as erroneous and consequently the order of penalty ceased to exist and the Tribunal has consequently passed a perverse order, on the facts and circumstances of the case.
Without prejudice, whether the Tribunal was not justified in appreciating that the notice under Section 271 (1) (c) of the Act, was defective and ought to have set aside the order as bad in law and have consequently passed a perverse order, on the facts and circumstances of the case”.
The learned counsel for the revenue did not dispute the fact that the order of assessment was set aside and the case was remitted back to the Assessing Officer. Consequently, there cannot be any order of penalty under Section 271 (1)(c) of the Act and therefore, the question of law is answered in favour of the assessee and against the revenue.
In view of the above, the appeal is allowed and the impugned order of penalty passed by the Assessing
Officer for the assessment year 2010-11 and the consequent order passed by the Commissioner of Income Tax (Appeal) in case No.18/278/W/4(1)(1)/CIT(A)-4/2013- 14 and the order of the Income Tax Appellate Tribunal, Bengaluru Bench ‘B’, Bengaluru in I.T.A.No.997/Bang/2015 dated 09.06.2017 are set aside.
Sd/- JUDGE
Sd/- JUDGE
NR/-