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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI R.C. SHARMA & SHRI SANDEEP GOSAIN
The present appeal has been filed by the assessee against the order of Commissioner of Income Tax (Appeals)-34, Mumbai (in short ‘CIT(A)’) dated 11.03.2015 for A.Y 2000-01 on the following grounds of appeal :
“1. The learned Commissioner of Income - tax (Appeals) 34, Mumbai (hereinafter referred as "the learned CIT(A)") has erred in law and on the facts and circumstances of the case in confirming the order of Assessing Officer in levying penalty U/s 271(1)(c) of Rs.3,00,000/-.
The learned CIT(A) has erred in law and on the facts and circumstances of the case in not appreciating the fact that the deduction u/s 80HHC will correspondingly increase by the same amount from the alleged addition/ disallowance of consultancy charges of Rs. 7,80,000/-. And thus the total taxable income of the Appellant will remain the same.
3. The learned CIT(A) has erred in law and on the facts and circumstances of the case in confirming the stand taken by the A O that the payment of Consultancy charges of Rs. 7,80,000/- was not incurred for the purpose of business.
4. The learned CIT(A) has erred in law and on the facts and circumstances of the case in confirming the order of A O in not waiting till the disposal of Miscellaneous Application filed by the Appellant on 13th February 2013.
2. The brief facts of the case are that return of income declaring total income at Nil was filed on 31.10.2000. The return of income was processed u/s 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) accepting the income declared by the assessee. Subsequently, the case was reopened by issue of notice u/s 148 of the Act and assessee filed revised return declaring total income at Rs.1,64,445/- and assessment was completed u/s 143(3) r.w.s. 147 on 24.3.2005 assessing the total income at Rs.13,98,420/-. In the assessment order, an addition was made on account of consultancy charges of Rs.7,80,000/- and disallowance of deduction u/s 80HHC of Rs.4,53,971/-. Penalty proceedings u/s 271(1)(c) of the Act was also initiated on these issues. Initially notice u/s 271 r.w.s 274 of the Act was issued on 24.3.2005, which has been duly served on the assessee. Subsequently, the assessee filed an appeal before the Ld. CIT(A) on 25.4.2005 and the proceedings were kept in abeyance till disposal of the appeal before Ld. CIT(A). Vide order dated 28.11.2011 the Ld. CIT(A) decided the matter and dismissed the appeal filed by the assessee. Consequently, the penalty proceedings were initiated against the assessee and after considering the reply filed by the assessee, penalty of Rs.3,00,000/- u/s 271(1)(c) of the Act read with Expl. (1) was levied upon the assessee vide order dated 28.3.2013. Aggrieved by the order of levy of penalty, assessee preferred an appeal before the Ld. CIT(A) and Ld. CIT(A) after considering the case of both parties dismissed the appeal filed by the assessee. Aggrieved by the order of Ld. CIT(A), assessee preferred the present appeal before us on the grounds mentioned hereinabove.
At the very outset, Ld. AR representing the assessee submitted that the Mumbai bench of the Tribunal in for A.Y 2000-01 in assessee’s own case had restored the issue to the file of Assessing Officer with a direction to recompute the deduction u/s 80HHC of the Act as per law after taking into consideration the disallowance of Rs.7,80,000/- and after giving the assessee a reasonable opportunity of hearing. The operative paragraph of the Tribunal’s order is reproduced below :-
“5. We have heard both the parties and their contentions have carefully been considered. In the facts and circumstances of the case we consider it just and proper to restore this issue to the file of AO with a direction to recomputed the deduction under section 80HHC as per law after taking into consideration the disallowance of Rs.7,80,000/- and after giving the assessee a reasonable opportunity of hearing. We direct accordingly.”
We have perused the order of the Tribunal wherein the Tribunal in the quantum appeal has restored the issue to the file of the Assessing Officer with the direction to recompute the deduction u/s 80HHC of the Act as per law after taking into consideration the disallowance of Rs.7,80,000/-. Since the basis for levy of penalty in the quantum appeal has been restored to the file of the Assessing Officer, therefore, the order of penalty levied on the basis of the order in quantum appeal is not sustainable at this stage and, therefore, we also restore the matter to the file of the Assessing Officer to decide the issue of penalty afresh after the decision on quantum appeal on the same issue and after recomputing the deduction u/s 80HHC of the Act.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 12th August, 2016.