SHIVOM VIDYAPEETH SHIKSHAN SAMITI,RAIPUR vs. INCOME TAX OFFICER, EXEMETION 2, RAIPUR, RAIPUR

The captioned appeal is filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 26.10.2022 u/s 250 of the Income Tax Act, 1961 for AY 2015-16, instituted against the penalty order by Ld. Assessing Officer u/s 271(1)(c) dated 28.06.2018. The grounds of the appeal raised by the assessee are as under: “1. That under the facts & the law, the Ld. CIT (A) erred in confirming the Order of Penalty levied by the Ld. AO u/s 271(1)(c) at Rs.2,40,630/- rejecting the explanation. Prayed that provisions of Sec.271(1)(c) are not applicable, penalty levied at Rs.2,40,630/- kindly be cancelled.

That under the facts & the law, the Ld. CIT (A) further erred in confirming the Penalty levied at Rs. 2,40,630/- u/s 271(1)(c) by the Ld. AO, though the Ld. AO did not allow opportunity to the appellant as to for which default, penalty proceedings were initiated. Prayed to cancel the Penalty.

That under the facts & the law, the Ld. CIT (A) further erred in confirming the Order of Ld. AO levying penalty u/s 271(1)(c) at Rs. 2,40,630/- though the Return of Income was filed on 09.09.2016 whereas registration u/s 12A was granted to the Appellant vide Order dated 20.04.2017 by Ld. CIT (Exemption) from Assessment Year 2017-18, as such, the assessment was pending on the date when registration was granted, there being no change in the objects and activities, and as such, as per provisions of the Finance (No. 2) Act, 2014 deduction u/s 11 was available, and therefore, the income should have been assessed at Nil, prayed to cancel the penalty levied.” 3. The brief facts of the case are that the assessee is an educational institute, have filed its return of income electronically on 07.12.2015 declaring total income as Nil. The case of the assessee was selected for scrutiny through CASS to verify “Large deduction claimed u/s. 57 and large claim of depreciation for trust”. The Ld. AO completed the assessment u/s 143(3) of the act by making an addition of Rs.11,47,592/- by denying exemption u/s. 10(23C) (iii ad) of the Act claimed by the appellant as per the return of income. Accordingly, the AO levied penalty u/s 271(1)(c) on the addition of Rs.11,47,592/- considering the concealment of income by the assessee.

Aggrieved by the order of Assessing Officer, the assessee preferred an appeal before the Ld. CIT(A), NFAC. However, the contentions of the assessee were dismissed by the Ld. CIT(A). Now, the assessee is in appeal before us challenging the decision of Ld. CIT(A).

At the outset, the Ld. AR for the assessee submitted before us, an order passed by the SMC Bench of ITAT, Raipur in assessee’s own case in & 263/RPR/2022 for AYs. 2015-16 and 2016-17 dated 17.03.2023, wherein the quantum appeal of the assessee against the order 143(3) for the relevant assessment year 2015-16 was disposed off by the coordinate bench of ITAT, Raipur, with following observations: “13. Considering the totality of the facts involved in the present case, I am of the considered view that in the backdrop of the CBDT Circular No.01/2015, dated 21.01.2015 the assessee would duly be entitled for the benefit of Sections 11/12 of the Act for the year under consideration i.e. AY. 2015-16. However, as the A.O had in the course of the assessment proceedings summarily rejected the assesse’s claim for exemption u/ss.11/12 of the Act, i.e., without looking into the other aspects, therefore, the matter in all fairness requires to be restored to his file for framing of a fresh assessment in light of my aforesaid observations. Before parting, I may herein observe that the observations recorded hereinabove are confined to the assessee's entitlement for the relief contemplated in CBDT Circular No.01/2015 (supra) and the same would not come in the way of the A.O as regards making of further verifications as regards the assessee's entitlement for exemption u/ss. 11/12 of the Act for which, he shall remain at a liberty to carry out necessary verifications. Accordingly, the matter is restored to the file of the A.O with a direction to frame a fresh assessment. 14. In the result, the appeal of the assessee in ITA No. 262/RPR/2022 for A.Y.2015-16 is allowed for statistical purposes in terms of my aforesaid observations.” On perusal of the aforesaid observations of the Co-ordinate Bench of this Tribunal, it was the submission of the Ld. AR that since the issues pertaining to quantum appeal of the assessee for AY 2015-16 in ITA No.262/RPR/2022 was restored back to the file of Assessing Officer to frame a fresh assessment in terms of observations of the ITAT, consequently, penalty order passed and penalty imposed based on such assessment order which is set aside by the Tribunal cannot sustain. To support this contention, the Ld. AR of the assessee submitted an order in the case of K.C. Builders vs. ACIT, reported in [2004] 135 taxman 461 (SC), wherein the Hon’ble Apex Court has held that “Whether where an