SAMEER MAVJI PATEL,MUMBAI vs. DCIT 19(1), MUMBAI

Briefly stated the facts are, the assessee an individual filed his return of income for the assessment year under consideration dated 28th March 2008, declaring total income of ` 60,37,701. The assessment in case of assessee was completed under section 143(3) of the Act vide order dated 29th December 2009, making the following additions:–

The assessee challenged the addition made in an appeal before the learned Commissioner (Appeals) and subsequently before the Tribunal. On the basis of additions made, the Assessing Officer initiated imposition of penalty under section 271(1)(c). In response to the show cause notice issued under section 274 r/w section 271(1)(c) though assessee submitted its explanation against imposition of penalty under section 271(1)(c), but the Assessing Officer rejecting the explanation of the assessee, held that assessee having not disclosed the true and correct income has concealed the particulars of income. Accordingly, he proceeded to impose penalty under section 271(1)(c) for an amount of ` 30,20,596. Being aggrieved of the order

As it appears, before the first appellate authority, assessee vide letter dated 26th December 2013, submitted that assessee’s appeal before the Tribunal against the additions sustained by the learned Commissioner (Appeals) has already been heard by the Tribunal. Therefore, he requested for keeping the penalty proceedings in abeyance till order is passed by the Tribunal. The learned Commissioner (Appeals), however, ignoring the letter of the assessee proceeded to dispose off the appeal ex–parte by confirming the imposition of penalty under section 271(1)(c).

Learned A.R. submitted before us, in the mean while the Tribunal has disposed off assessee’s appeal on quantum by restoring the issue relating to additions made on account of excess stock, rejection of books of account as well as unexplained cash to the Assessing Officer for deciding afresh. He submitted, in any case of the matter, the learned Commissioner (Appeals) was wholly unjustified in dismissing the appeal of the assessee ex–parte, though, he was aware of the fact that assessee’s appeal on quantum has already been heard by the Tribunal.

Learned Departmental Representative supported the order of the learned Commissioner (Appeals).

We have considered the submissions of the parties and perused the material available on record. Undisputedly, assessee’s appeal against additions made on the basis of which penalty was imposed in the mean while, was disposed off by the Tribunal vide order passed in ITA no.2508/Mum./2011 dated 19th December 2013. On a perusal of the said order, it is found that the major additions on the basis of which the Assessing Officer imposed penalty under section 271(1)(c) have been restored back to the file of the Assessing Officer for deciding afresh. The Tribunal has also restored back the issue relating to rejection of assessee’s books of account for fresh adjudication. In these circumstances, when the additions on the basis of which penalty under section 271(1)(c) no longer survive in view of the order passed by the Tribunal referred to herein above, the penalty under section 271(1)(c) also cannot survive. That being the case, we deem it appropriate to set aside the impugned order of the learned Commissioner (Appeals). However, it is open to the Assessing Officer to initiate penalty proceedings afresh, if warranted, after completion of the assessment in pursuance to the directions of the Tribunal.

In the result, appeal stands allowed for statistical purposes. Order pronounced in the open Court on