SWATIPUSHP DEALERS PVT. LTD.(SINCE MERGED WITH SNOWTEMP COMMERCIAL PVT. LTD.) ,KOLKATA vs. ITO, WARD-11(2), KOLKATA

(A.Y. 2011-2012) Swatipushp Dealers Pvt. Ltd. (since merged with Snowtemp Commercial Pvt. Ltd.) National Faceless Appeal Centre (NFAC), Delhi dated 5th February, 2024 passed for assessment year 2011-12.

The assessee has taken five grounds of appeal, out of which Grounds No. 1, 2, 4 & 5 are general in nature, which do not call for recording of any specific finding.

Brief facts of the case are that the assessee has filed its return of income electronically on 18.09.2012 showing a returned loss of Rs.(-)4,615/-. A scrutiny assessment was passed on 30.01.2014 at an assessed loss of Rs.3,666/-. The ld. Pr. CIT took cognizance under section 263 of the Income Tax Act and thereby vide his order dated 25.03.2016, the impugned assessment order passed on 30.01.2014 under section 143(3) was set aside.

According to the ld. Assessing Officer, in pursuance of this order, a fresh assessment order was passed on 12.09.2016. It appears that on the basis of this order, a penalty under section 271(1)(c) was imposed by the ld. Assessing Officer vide his order dated 14.06.2018. The ld. Assessing Officer has imposed a penalty of Rs.2,95,95,575/-.

Dissatisfied with this order, an appeal was filed before the ld. CIT(Appeals) on 03.07.2018. This appeal has been decided by the ld. CIT(Appeals) vide impugned order dated 05.02.2024.

It emerges out that before finalizing of an assessment order in pursuance to 263 order an appeal was filed before the ITAT bearing ITA No. 1144/KOL/2017. The appeal of the assessee was partly allowed for statistical purposes. The Tribunal has held that since hearing was not provided to the assessee, therefore, 263 order of the ld. Pr. CIT is modified to the extent that instead of finalization of the assessment, it is restored to the ld. Assessing Officer for passing of a de novo assessment. The concluding paragraph of the order passed under section 263 reads as under:-

While giving effect to the order of the Tribunal, the ld. Assessing Officer has passed the assessment order on 30.12.2019 and he did not make any addition. The income of the assessee has determined according to the original assessment order dated 30.01.2014 stood as it is. Copy of this assessment order is available on page 43 of the record. For completeness of the facts and circumstances, we deem it appropriate to take note of this order, which reads as under:-

Sub-clause (iii) of section 271(1)(c) reads as under:- “Failure to furnish returns, comply with notices, concealment of income, etc. 271:- (1) If the Assessing Officer or the Joint Commissioner or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person- (a)………….. (b)………….. (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or (d)……………. (i)………… (ii)…………

A perusal of sub-clause (iii) of section 271(1)(c) would indicate that penalty would be equivalent or to the extent of three times of taxes, if any, payable by an assessee on the addition made to his income could be charged under this sub-clause. In the present case, no addition has attained finality ultimately. Income of the assessee has been determined equivalent to the amount disclosed by it, which is in a negative figure. Neither any losses have been disallowed nor any addition has been made, therefore, the very foundation to compute the penalty is extinguished. In this situation, no penalty is imposable upon the assessee. It is pertinent to note that ld. CIT(Appeals) failed to take note of all these facts. The assessment order was passed long back in 2019. Unnecessary this appeal was kept pending upto 2024. Accordingly, we allow the appeal of the assessee and delete the penalty.

In view of the above, the appeal of the assessee is allowed. Order pronounced in the open Court on 11/06/2024. Sd/- Sd/- (Manish Borad) (Rajpal Yadav) Accountant Member Vice-President (KZ) Kolkata, the 11th day of June, 2024