ITO 25(1)(3), MUMBAI vs. SUNIL R.SHAH, MUMBAI

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ITA 2657/MUM/2015Status: DisposedITAT Mumbai15 July 2016AY 2008-093 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessment order, which formed the basis for the penalty, had been set aside and remanded by a higher tribunal. Therefore, the penalty could not be sustained.

What were the facts?

The Assessing Officer levied a penalty under section 271(1)(c) for bogus purchases. The CIT(A) deleted this penalty. The Revenue appealed this deletion.

What were the issues?

Whether a penalty under section 271(1)(c) can be sustained when the underlying assessment order has been set aside and remanded.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI

Before: SHRI G.S. PANNU

For Appellant: Shri Keshav B. Bhujale
For Respondent: Shri K.R. Kardam
Hearing: 13/07/2016Pronounced: 15/07/2016

The captioned appeal by the Revenue is directed against the order of CIT(A)-37, Mumbai dated 24.02.2015, pertaining to the Assessment Year 2008-09, which in turn has arisen from the order passed by the Assessing Officer dated 18.03.2013 under section 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’).

2.

In this appeal, Revenue has raised the following Grounds of appeal :

“1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the penalty of Rs.12,74,268/- levied u/s 271(1)(c) of the I.T. Act ignoring the fact that in appellate proceedings against assessment order, the Ld. CIT(A) himself has held that assessee received accommodation bills only and not received actual goods and also payment made through cheques were returned back to assessee in cash.

2. The appellant prays that the order of the Ld. CIT(Appeal) on the above grounds be set aside and that of the Assessing Officer be restored.”

3.

In this case, assessment u/s 143(3) r.w.s. 147 of the Act was finalized by the Assessing Officer on 23.12.2010 wherein addition of Rs.40,29,132/- was made to the returned income on account of bogus purchases. It transpires that the same was reduced to Rs.37,26,996/- by the CIT(A) vide order dated 22.02.2012. Subsequently, the Assessing Officer held the assessee guilty of default u/s 271(1)(c) of the Act and vide order dated 18.03.2013 he levied penalty of Rs.12,74,268/- being 100% of the tax sought to be evaded on such addition. This penalty has since been deleted by the CIT(A) on the ground that, on facts, it could not be said that assessee either concealed the income or furnished inaccurate particulars of income. Against such deletion of penalty, Revenue is in appeal before the Tribunal.

4.

Before me, at the time of hearing, learned representative for the respondent-assessee pointed out that the assessment order dated 23.12.2010 passed by the Assessing Officer had travelled to the Tribunal, who vide order in dated 11.03.2016 has set-aside the same and the matter has been remanded back to the file of the Assessing Officer for adjudication afresh. Ostensibly, in view of the said decision of the Tribunal, the assessment order which forms the basis for levy of penalty u/s 271(1)(c) of the Act itself does not survive. As a consequence, there cannot be any justification for upholding the penalty of Rs. 12,74,268/-, which has otherwise been deleted by the CIT(A), albeit on a different ground. Be that as it may, in view of the order of Tribunal dated 11.03.2016 (supra), the only course available for the present is to dismiss the appeal of the Revenue.

5.

Resultantly, appeal of the Revenue is dismissed.

Order pronounced in the open court on 15th July, 2016.

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