Case Law Details
ITO Vs Uttarkhand Poorv Sainik Kalyan Nigam Ltd. (ITAT Dehradun)
In this case before the Income Tax Appellate Tribunal (ITAT), Dehradun, the Revenue challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)] deleting penalty imposed under Section 271(1)(c) of the Income-tax Act, 1961 for Assessment Year 2013–14. The penalty of ₹2.30 crore had been levied on the ground that the assessee wrongly claimed exemption under Section 10(26BBB), which was disallowed during reassessment proceedings completed under Sections 143(3) read with 147.
The Assessing Officer held that the assessee was not a statutory corporation eligible for exemption and treated the claimed exempt income as concealed income, leading to penalty proceedings. However, the CIT(A) deleted the penalty by following an earlier decision in the assessee’s own case for Assessment Year 2009–10.
During the hearing, it was noted that the issue of exemption under Section 10(26BBB) was pending before the Uttarakhand High Court for Assessment Year 2010–11, where substantial questions of law had been admitted. The assessee had filed Form 8 under Section 158A, undertaking that the outcome of the High Court decision would be binding on subsequent years, including the present case.
The Tribunal observed that once such an undertaking is filed, the assessee is bound to accept the decision of the higher appellate authority. Therefore, the outcome of the High Court proceedings would directly impact the penalty proceedings for the relevant assessment year. In view of this, the Tribunal held that there was no justification to continue or sustain the penalty at this stage.
Accordingly, the Tribunal found no error in the CIT(A)’s decision and upheld the deletion of penalty. The appeal filed by the Revenue was dismissed.
FULL TEXT OF THE ORDER OF ITAT DEHRADUN
The present appeal is filed by Revenue against the order dated 23.02.2018 by Ld. Commissioner of Income Tax (A), Dehradun [“Ld.CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 [“the Act”] deleting the penalty levied u/s 271(1)(c) vide penalty order dated 24.03.2017 pertaining to Assessment Year 2013-14.
2. Heard the contentions of both the parties at length and perused the material available on record. In this case, assessment was completed u/s 143(3) r.w.s. 147 of the Act dated 25.02.2015 wherein exemption claimed by the assessee u/s 10(26BBB) of the Act was withdrawn by holding that the assessee is not a statutory corporation eligible for exemption and penalty proceedings u/s 271(1)(c) of the Act were initiated for concealment of income/furnishing inaccurate particulars of income. Thereafter, penalty was levied u/s 271(1)(c) vide order dated 24.03.2017 of INR 2,30,99,600/- on the amount of income claimed as exempted u/s 10(26BBB) as concealed income. IN first appeal, the penalty was deleted by Ld. CIT(A) by following the order in assessee’s own case for AY 2009-10. During the course of hearing, Ld.AR drew our attention to the order of Co-ordinate Bench, Delhi Tribunal in ITA No.725/Del/2017 dated 19.03.2025 wherein it was stated by the assessee that the appeal for AY 2010-11 was filed before Hon’ble Uttarkhand High Court in 15/2019 wherein substantial questions of law is admitted by the hon’ble court and matter is pending for final adjudication. The assessee before the Tribunal in AY 2013-14 in quantum appeal, has filed Form 8 as prescribed u/s 158A of the Act admitting that outcome of the order of Hon’ble Uttarakhand High Court in the case of the assessee for AY 2010-11 would be binding. Thus, the consequential fate of the order of hon’ble high court also has the bearing on the present penalty proceedings u/s 271(1)(c) for AY 2013-14. Once the assessee has filed the undertaking u/s 158A of the Act, it is binding upon it to accept the judgement of the higher appellate forum and therefore, there is no reason to keep the present penalty proceedings alive.
3. In view of these facts, we find no error in the order of Ld.CIT(A) in deleting the penalty which may be survived in case the Hon’ble High Court decided the appeal against the assessee. Accordingly, all the Grounds of appeal raised by the Revenue are dismissed.
4. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open Court on 12.03.2026.
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