MAGNA CHEMICAL MANUFACTURERS PVT LTD.,CHENNAI vs. DCIT, CHENNAI

This appeal of the assessee is directed against the order of CIT(A) -8, Chennai dated 09.11.2015 and pertains to AY 2004-05 confirming the penalty levied by the A.O. under Section 271 (1)(c) of the Act.

Shri Philip George, the ld. counsel for the assessee submitted that the impugned order of the penalty passed by the AO is barred by limitation as provided in Section 275 (1) of the Act. According to the learned counsel, penalty can be levied before the expiry of six months from the end of the month in which the order of CIT(A) was received. In this case, the penalty order was passed on 30.03.2011 which is barred by limitation.

Referring to the merit of the appeal, the ld. Counsel submitted that there cannot be any penalty when the addition was made on estimation basis. Even though the Assessing Officer made an addition of Rs.24,69,070/- ultimately, this Tribunal confirmed the addition only to the extent of Rs.9,69,070/-. In fact, this Tribunal directed the AO to allow Rs.15,00,000/- as expenditure while the computing the taxable income.

On the contrary, Shri Sahadevan, the ld. Department representative submitted that the issue of limitation was not raised by the assessee before the lower authorities. The order of this Tribunal in the quantum appeal was dated 03.01.2012. The penalty was levied by the Assessing Officer by an order dated 30.03.2011. Therefore, the Assessing Officer has no occasion to consider the order of this Tribunal dated 03.01.2012. Moreover, both the authorities below had no occasion to examine the issue of limitation. Therefore, an opportunity may be given to the Assessing Officer to examine the matter once again.

We have considered the rival submissions on either side and also perused the material available on record. Admittedly, the appeal of the assessee was finally disposed off by this Tribunal by an order dated 03.01.2012 and the Assessing Officer has no occasion to consider the order of this Tribunal. In fact, the order of this Tribunal was not available when the penalty was levied on 30.03.2011. Therefore, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer after considering the decision of this Tribunal dated 03.01.2012.

Accordingly, the orders of the lower authorities are set aside and the entire issue raised by the assessee including the issue of limitation is remitted back to the file of the AO. The AO shall re-examine the matter afresh in the light of the materials that may be produced by the assessee and thereafter decide the same in accordance with law after giving a reasonable opportunity to the assessee.

In the result, appeal of the assessee is Allowed for Statistical Purposes.