WAMAN HARI PETHE,MUMBAI vs. CIT(A) 26, MUMBAI

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ITA 6900/MUM/2010Status: DisposedITAT Mumbai14 December 2016AY 2005-064 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the quantum of assessment for the relevant year had already been set aside by a previous order, the basis for levying the penalty was nullified. Therefore, the penalty was not sustainable.

What were the facts?

The assessee appealed against a penalty levied by the CIT(A) for unexplained advances from customers. The CIT(A) had initiated penalty proceedings under Section 271(1)(c) after the assessee failed to justify the advances.

What were the issues?

Whether a penalty under Section 271(1)(c) can be sustained when the underlying assessment order has been set aside. The issue of proper notice for enhancement of income was also raised.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

Before: SHRI RAJENDRA, AM & SHRI AMARJIT SINGH, JM

For Appellant: Ms. Uma Mahadeokar
Hearing: 14.12.2016Pronounced: 14.12.2016

Assessee by: Ms. Uma Mahadeokar Revenue by: Ms. Anupama Singla सुनवाई की तारीख / Date of Hearing: 14.12.2016 घोषणा की तारीख /Date of Pronouncement: 14.12.2016 आदेश / O R D E R

PER AMARJIT SINGH, JM:

1.

The assessee has filed the present appeal against the order dated 16.08.2010 passed by the Commissioner of Income Tax(Appeals)- 26, Mumbai [hereinafter referred to as the “CIT(A)”]relevant to the assessment year 2005-06 wherein the penalty has been invoked by the CIT(A).

2.

The assessee has raised the following grounds:-

A.Y.2005-06 “1. The learned CIT(A) failed to give specific notice for the proposed addition for enhancement of income.

2. The learned CIT(A) failed to appreciate the fact that the disputed additions (deposits from customers) comprised not only deposits for the current A.Y.2005-06 but also earlier years as mentioned in submissions made before him.

3. The learned CIT(A) failed to appreciate that most of the deposits have been already adjusted subsequently and included in sales on execution of the orders.

4. The order pass by the CIT(A) is without jurisdiction and bad in law.

5. The learned CIT(A) erred in levying penalty of Rs.22,42,351/- u/s.271(1)(c) of the I.T.Act.”

3. The brief facts of the case are that during the course of appellate proceedings, it was found that appellant had shown advance to the tune of Rs.61,27,898/- in the name of various customers, which were not proved as genuine and verifiable one. Thereafter, the notice was given to the assessee but the assessee failed to justify the claim, hence the proceeding u/s.271(1)(c) of the Income Tax Act, 1961( in short “the Act”) was initiated. Show cause notice dated 08.06.2010 was given to the assessee and the assessee also filed the reply for the same. Considering the reply of the assessee, the appellate authority levied the penalty to the tune of Rs.22,42,351/- u/s.271(1)(c) of the Act. Feeling aggrieved the assessee has filed the present appeal before us.

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