RAJU VERMA,DEHRADUN vs. INCOME TAX OFFICE, CENTRAL CIRCLE

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ITA 73/DDN/2024Status: DisposedITAT Dehradun23 April 2025AY 2011-12Bench: SHRI VIMAL KUMAR (Judicial Member), SHRI BRAJESH KUMAR SINGH (Accountant Member)4 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the assessment proceedings were quashed by a previous ITAT order due to lack of valid approval, the penalty proceedings based on those assessment proceedings were rendered non-existent and liable to be cancelled.

What were the facts?

A search operation was conducted on the assessee's premises, and during appellate proceedings, the assessee's income was enhanced. Penalty proceedings under Section 271(1)(c) were initiated based on this enhancement.

What were the issues?

Whether penalty proceedings can survive when the underlying assessment proceedings have been quashed. The validity of penalty proceedings initiated on the basis of an assessment order that was subsequently set aside.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 132,Section 153D

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Income Tax Appellate Tribunal, DEHRADUN BENCH “DB”: NEW DELHI

Before: SHRI VIMAL KUMAR & SHRI BRAJESH KUMAR SINGH

For Appellant: Shri KK Juneja, Adv
For Respondent: Shri S.K. Chaterjee, CIT DR
Hearing: 17.04.2025Pronounced: 23.04.2025

PER VIMAL KUMAR, JUDICIAL MEMBER:

1.

The appeal filed by the appellant/assessee is against penalty order dated 09.04.2024 passed by Learned Commissioner of Income-Tax(Appeals)-3, Noida (hereinafter referred as ‘Ld. CIT(A)’) under Section 271(1)(c) of the Income-Tax Act, 1961 (hereinafter referred as “the Act”) for assessment year 2011-12.

2.

Brief facts of case are that a search and seizure operation under Section 132 of the Act was initiated on the business and residential premises of the assessee on 14.03.2012 at the Punjab Jewellers Group of cases. The assessee furnished his return of income on 28.03.2013 declaring total income at Rs.3,29,350/-. During appellate proceedings in Appeal, Ld. CIT(A)-2, Agra, income of the assessee was enhanced. Penalty proceedings under Section 271(1)(c) of the Act were initiated vide order dated 15.11.2023. After show-cause-notice dated 14.12.2023, penalty order dated 09.04.2024 was passed by the Ld. CIT(A).

3.

Being aggrieved, appellant/assessee preferred present appeal.

4.

Learned Authorised Representative for assessee submitted that the Income Tax Appellate Tribunal, Dehradun Bench, New Delhi in vide order dated 09.04.2025 set aside quantum order and for want of valid approval u/s. 153D of the Act. Since, the entire assessment proceedings have been quashed by the Income Tax Appellate Tribunal, the penalty proceedings based on the assessment order may please be treated as no-nest and liable to be cancelled.

5.

Learned departmental representative relied on impugned order.

6.

From examination of record in the light of aforesaid rival submissions, it is crystal clear that ITAT, Dehradun Bench in dated 09.04.2025 had quashed the assessment proceedings.

7.

Hon’ble High Court of Delhi in titled as “PCIT vs. Fortune Technocomps (P) Ltd. in para nos. 6 & 7 has held as under:

6. Despite the basis for issuance of the penalty notice under Section 271 (1) (c) having disappeared with the deletion by the CIT (A) of the addition made by the AO, the latter continued with the penalty proceedings and imposed the penalty as noted above. This was set aside by the CIT (A). The Revenue then went in appeal before the ITAT which by the impugned order affirmed the order of the CIT (A). Relying on the decision of the Calcutta High Court in CIT v. Ananda Bazar Patrika Pvt. Ltd. (1979) 116 ITR 416 (Cal), the ITAT held that once the basis for initiation of penalty proceedings was altered or modified by the first appellate authority, the Assessing Officer has no jurisdiction thereafter to proceed on the basis of the findings of the first appellate authority."

7. Having examined the impugned order of the ITAT and having considered the submissions of the learned counsel for the Revenue, the Court is unable to discern any legal infirmity in the analysis or conclusion reached by the ITAT. Once the assessment order of the AO in the quantum proceedings was altered by the CIT (A) in a significant way, the very basis of initiation of the penalty proceedings was rendered non-existent. The AO could not have thereafter continued the penalty proceedings on the basis of the same notice. Also, the Court concurs with the CIT (A) and the ITAT that once the finding of the AO on bogus purchases was set aside, it could not be said that there was any concealment of facts or furnishing of inaccurate particulars by the Assessee that warranted the imposition of penalty under Section 271(1)(c) of the Act.”

8.

In view of above material facts, circumstances and well settled principle of law, once the basis of penalty proceedings has been cancelled, the penalty proceedings are set aside.

9.

In the result, the appeal filed by assessee is allowed.

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