ITAT Delhi Judgments — August 2018

The Tribunal held that the levy of penalty under Section 271(1)(b) was bad in law because no statutory notice under Section 274(1) was issued to the assessee, and the assessee was not afforded an opportunity of being heard. This non-compliance vitiated the assumption of jurisdiction by the Assessing Officer.

The Tribunal held that the CBDT circular is binding on the Revenue. Since the tax effect in this appeal was below the stipulated limit, the appeal was not maintainable.

The Tribunal held that in view of the CBDT Circular No. 03/2018, which raised the monetary limits for filing appeals, the appeal filed by the Revenue was not maintainable. Pending appeals with a monetary limit of Rs. 20 lakhs were to be treated as withdrawn.

The Tribunal held that the issuance of a notice under Section 274(1) is a jurisdictional requirement for levying penalty under Section 271(1)(b). Non-issuance of such notice and failure to provide an opportunity of being heard vitiates the penalty proceedings.

The Tribunal found merit in the assessee's explanation regarding non-service of notice. It was decided that the assessee should be given an opportunity to present his case before the CIT(A).

The Tribunal held that the levy of penalty under Section 271(1)(b) was unsustainable because no statutory notice under Section 274(1) was issued to the assessee, denying them an opportunity to be heard. The Tribunal also noted that a mere proposal to initiate penalty proceedings is not equivalent to recording the requisite satisfaction.

The Tribunal held that the non-issuance of a notice under section 274(1) is a jurisdictional defect that vitiates the penalty levied under section 271(1)(b). The principles of natural justice were also violated as the assessee was not afforded an opportunity to be heard.

The Tribunal held that since the additions on which the penalty was based have been deleted, there is no basis for the penalty. The penalty cannot survive if the assessment itself is set aside.