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

आयकर अपील�य अ�धकरण, रायपुर �यायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR �ी र�वश सूद, �या�यक सद�य एवं �ी अ�ण खोड़�पया, लेखा सद�य के सम� । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं./ITA No.261/RPR/2022 �नधा�रण वष� /Assessment Year: 2015-16 Shivom Vidyapeeth Shikshan Samiti V Income Tax Officer 214, Shivom Vihar Raipur-492 013 s Exemption-2 Chhattisgarh Raipur PAN: AAHTS 6464M (अपीलाथ� /Appellant) .. (��यथ� / Respondent) �नधा�रती क� ओर से /Assessee by : Shri G.S. Agrawal & Shubham Agarwal, CAs राज�व क� ओर से /Revenue by : Shri Satya Prakash Sharma, Sr. DR सुनवाई क� तार�ख / Date of Hearing : 08/08/2023 घोषणा क� तार�ख/Date of Pronouncement : 06/09/2023 आदेश / O R D E R Per Arun Khodpia, AM : 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. 2. 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.

2 ITA No. 261/RPR/2022 3. 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.

3 ITA No. 261/RPR/2022 u/s 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

4 ITA No. 261/RPR/2022 order of assessment or reassessment on basis of which penalty has been levied on assessee has itself been finally set aside or cancelled by Tribunal or otherwise, penalty cannot stand by itself and same is liable to be cancelled.”- Held yes. It was the submission that the ratio of law laid down by the Hon’ble Apex Court in the case of K.C. Builders vs. ACIT (supra), which has a binding precedence, therefore the order of penalty which was on the foundation of assessment order u/s 143(3), since the order u/s 143(3) itself is set aside, the penalty order needs to be annulled. The Ld. AR further drew our attention to an order passed by the ITAT, “F” Bench, Mumbai in ITA No.3549/Mum/2010 dated 22nd July, 2011 in the case of ITO vs. Shri Vijay Ajmera, wherein ITAT, Mumbai has held that without going into the merits or levy of penalty, the CIT(A) has cancelled the order on the sole ground that the assessment order itself was set aside, therefore, the question of penalty consequently to that order does not arise, therefore, there was no reason for ITAT to interfere with such findings of the Ld. CIT(A). Based on the aforesaid submissions, the Ld. AR requested to cancel the penalty order passed u/s 271(1)(c) by the Ld. AO and sustained by the Ld. CIT(A). 6. The Ld. Sr. DR vehemently supported the orders of Ld. AO and Ld. CIT(A). 7. We have heard the rival contention, perused the materials available on record, orders of the authorities below and also the judicial pronouncements placed before us for our consideration to decide the issues. Admittedly, in the present case, since the quantum appeal of the

5 ITA No. 261/RPR/2022 assessee in ITA No.262/RPR/2022 dated 17/03/2023 was set aside by the ITAT, Raipur, therefore, respectfully following the ratio of law laid down by the Hon’ble Apex Court in the case of K.C. Builders vs. ACIT (supra), we are of the considered opinion that the penalty order passed by the Ld. Assessing Officer u/s 271(1)(c) and sustained by the Ld. CIT(A) cannot stand by itself and the same is liable to be cancelled. We, therefore, set aside both the orders of Ld. CIT(A) and Ld. AO pertaining to levy of penalty U/s 271(1)(c) which have lost the foundation of order u/s 143(3) when the quantum appeal for said assessment which was the basis for levying of penalty itself was set aside by the Tribunal. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the court on 06/09/2023. Sd/- - Sd/- Sd/- (RAVISH SOOD) (ARUN KHODPIA) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER रायपुर/Raipur; �दनांक Dated 06/09/2023 Pramod Kumar, Sr. PS (on tour) आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant- 2. ��यथ� / The Respondent- आयकर आयु�(अपील) / The CIT(A), 3. 4. आयकर आयु�त / CIT 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur गाड� फाईल / Guard file. 6. स�या�पत ��त //True Copy// आदेशानुसार/ BY ORDER,

(Assistant Registrar) आयकर अपील�य अ�धकरण, रायपुर/ITAT, Raipur