M/S. EMPLOYEES PROVIDENT FUND ORGANIZATION,DELHI vs. ACIT, NEW DELHI

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ITA 2659/DEL/2015Status: DisposedITAT Delhi13 September 20185 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that since the original orders determining the tax liability were set aside, the penalties levied under Section 221(1) based on those orders had no basis. Therefore, the matter was restored to the Assessing Officer for fresh orders after the consequential orders under Section 201 r.w.s. 201(1A) were passed.

What were the facts?

The assessee, Employees Provident Fund Organization, appealed against penalties levied under Section 221(1) for assessment years 2008-09 and 2009-10. These penalties were related to tax liabilities determined under Section 201 r.w.s. 201(1A). The original orders under Section 201 r.w.s. 201(1A) had been set aside by the ITAT and restored to the Assessing Officer.

What were the issues?

Whether penalties under Section 221(1) can be sustained when the underlying tax liability orders have been set aside. The validity of penalties levied in absence of final determination of tax liability.

Which sections of the Income-tax Act were involved?

Section 221(1),Section 201,Section 201(1A)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘A’: NEW DELHI

Before: SHRI KULDIP SINGH & SHRI ANADEE NATH MISSHRA

For Appellant: Adv &

1. That on the facts and circumstances of the case, CIT(A) was not justified in confirming the penalty order of ACIT, Circle 51(1), New Delhi u/s 221(1) as per which Assessing Officer has levied penalty Rs. 5,00,000/-.

2. That on the facts and under the law, the CIT(A) erred in not appreciating that the default in payment of arrears of tax was for good and sufficient reasons and therefore no penalty should have been levied u/s 221(1) of the IT Act, 1961.

3.

That orders of the lower authorities are not justified on facts and same are bad in law.

For A.Y. 2009-10

1.

That on the facts and circumstances of the case, CIT(A) was not justified in confirming the penalty order of ACIT, Circle 51(1), New Delhi u/s 221(1) as per which Assessing Officer has levied penalty Rs. 5,00,000/-.

2. That on the facts and under the law, the CIT(A) erred in not appreciating that the default in payment of arrears of tax was for good and sufficient reasons and therefore no penalty should have been levied u/s 221(1) of the IT Act, 1961. 3. That orders of the lower authorities are not justified on facts and same are bad in law.

2.

These appeals are filed against the orders u/s 221(1) of IT Act for Assessment Years 2008-09 (F.Y.2007-08) & 2009-10 (F.Y. 2008-09) levying penalty amounting to Rs. 5,00,000/- in each of the two aforesaid Assessment Years. For both these Assessment Years, orders U/s 201 r.w.s. 201(1A) of the Act were passed by the Assessing Officer determining tax liability of Rs. 7899.85 lacs for Financial Year 2008-09 (A.Y. 2009-10) and Rs. 6193.69 lacs for Financial Year 2007-08 (A.Y. 2008-09). Against the two aforesaid orders u/s 201 r.w.s. 201(1A) of the IT Act, the Assessee filed appeals before the Ld. CIT(A). The matter traveled up to Income Tax Appellate Tribunal (ITAT). Vide consolidated order dated 03/08/2016 in & 2416/Del/2015 pertaining to Assessment Years 2008-09 and 2009-10 the Delhi Bench of ITAT set aside the order of Ld. CIT(A) and restored the matter to the file of the Assessing Officer with certain directions. It was informed to us, at the time of hearing, by Ld. Counsel for Assessee that the consequential fresh orders u/s 201 r.w.s. 201(1A) of IT Act have not been passed by the Assessing Officer till date.

3. In the meantime, vide separate orders, each dated 16.03.2012 U/s 221(1) of IT Act, the Assessing Officer also imposed penalty amounting to Rs. 5,00,000/- for each of Financial Year 2007-08 (Assessment Year 2008-09) and Financial Year 2008-09 (Assessment Year 2009-10). The Assessee’s appeals against the aforesaid orders U/s 221(1) of I.T Act were dismissed by the Ld. CIT(A) by order dated 16.02.2015 for Financial Year 2008-09 (A.Y. 2009-10) and order dated 17.02.2015 for Financial Year 2007-08 (A.Y. 2008-09). The present appeals before us are against the aforesaid two orders dated 16.02.2015 and 17.02.2015 of the Ld. CIT(A).

4.

We have heard both sides and carefully perused the materials on record. The Ld. Counsel for Assessee relied on aforesaid order dated 03.08.2016 of ITAT and on Om Prakash Aggarwal vs. ITO 66 ITR 175 (ALL.). He also referred to Section 221(2) of I.T. Act. The Ld. Departmental Representative relied on the orders of the lower authorities.

5.

It is noticed that the penalty u/s 221(1) of IT Act for the aforesaid two Assessment Years has been levied in respect of tax liabilities determined in orders U/s 201(1A) of IT Act for the aforesaid year. As the aforesaid orders u/s 201 r.w.s. 201(1A) of IT Act for Financial Year 2007-08 (Assessment Year 2008-09) and Financial Year 2008-09 (Assessment Year 2009-10) have been set aside by Delhi Bench of ITAT and restored to the file of the Assessing Officer, the penalty levied U/s 221(1) of I.T. Act have no legs to stand at present. We set aside the aforesaid orders dated 17.02.2015 and 16.02.2015 respectively, of the Ld. CIT(A) for A.Y. 2008-09 (F.Y. 2007-08) & A.Y. 2009-10 (F.Y. 2008-09); and restore the corresponding matter regarding penalty u/s 221(1) of the IT Act to the file of the Assessing Officer for fresh orders. The Assessing Officer shall pass fresh orders U/s 221(1) of I.T. Act after the consequential orders U/s 201 r.w.s. 201(1A) of I.T. Act pursuant to aforesaid order dtd. 03.08.2016 of ITAT are passed. The Assessing Officer will give reasonable opportunity to the assessee before passing fresh orders U/s 221(1) of IT Act.

6.

In the result, both the appeals of the assessee are partly allowed for statistical purpose.

Order pronounced in the open court on 13/9/2018

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