Case Law Details
VRML Constructions Pvt Ltd Vs Union of India & Ors (Bombay High Court)
Bombay HC Order on quashing penalty being imposed by AO on ITBA technical glitch with option to impose penalty as per appeal decision
Basis for levy of penalty
The relevant paragraph from the impugned penalty order
“The assessee has offered explanation in response to the notices issued during the course of penalty proceedings but was not found satisfactory because as per ITBA data there Form no. 35 is not found whereas assessee is claimed he is in before CIT(A) as facts are not verifiable. I have no alternate but to import penalty. Accordingly, the penalty proceeding is decided based on the information available on records
Observation and decision:-
This is not a case where the Assessing Officer, after being conscious of the institution of the Appeal, has nevertheless deemed it appropriate to exercise the powers under Section 275(1)(a) of the IT Act. The Assessing Officer has only observed that since the ITBA data did not reflect the institution of the quantum Appeal, the Assessing Officer felt that he had no alternative but to impose a penalty.
Thus, this is not a case where the penalty was imposed after independent application of mind. The main grounds for imposing the penalty were because the Assessing Officer felt that he had no alternative but to impose the penalty in the absence of the ITBA portal, reflecting the institution of the quantum Appeal by the Petitioner.
The Petitioner had pointed out that the quantum Appeal was indeed instituted. The Petitioner also produced the acknowledgment receipt evidencing the institution of the quantum Appeal. Because of a technical glitch, if this institution was not being reflected on the ITBA portal, no penalty should have been imposed by holding that the Assessing Officer had no alternative but to impose a penalty.
For the above reasons, we quash and set aside the impugned penalty order dated 8 February 2022. However, we clarify that the quashing of this order will not preclude the Respondents from initiating fresh proceedings for the imposition of penalty should they so desire upon the disposal of the Petitioner’s quantum Appeal before the Commissioner (Appeals).
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Heard learned Counsel for the parties.
2. The rule is made returnable immediately at the request of and with the consent of the learned Counsel for the parties.
3. This Petition pertains to assessment year 2018-2019. The Petitioner challenges an order dated 8 February 2022 under Section 270A of the Income Tax Act, 1961 (IT Act), which imposes a penalty of Rs.25,05,052/—on the Petitioner.
4. Mr Jain, the learned Counsel for the Petitioner, accepts that after the institution of this Petition, the Petitioner, to save the bar of limitation, has instituted an Appeal against the impugned order dated 8 February 2022. However, he submitted that the only reason for imposing the penalty in this case was that the Assessing Officer could not access the quantum Appeal already instituted by the Petitioner on the Department’s Income Tax Business Application (ITBA) portal. He pointed out that, factually, there was no dispute that such an Appeal was already filed on 21 November 2021. He also referred to a document on page 77 of the paper book of this Petition, namely, an acknowledgment receipt confirming that such an Appeal was already filed and was pending. Accordingly, he submitted that this Petition be entertained though the Petitioner may have already filed an Appeal to save the bar of limitation.
5. Mr Sharma, the learned Counsel for the Respondents, submitted that there was no hindrance to the Assessing Officer imposing the penalty, even though a quantum appeal may have been preferred. He referenced Section 275(1)(a) of the IT Act to support his argument.
6. We have considered the rival contentions and perused the material on record.
7. The relevant paragraph from the impugned penalty order evidencing the decision-making process is transcribed below for ease of reference: –
“The assessee has offered explanation in response to the notices issued during the course of penalty proceedings but was not found satisfactory because as per ITBA data there Form no. 35 is not found whereas assessee is claimed he is in before CIT(A) as facts are not verifiable. I have no alternate but to import penalty. Accordingly, the penalty proceeding is decided based on the information available on records as under:-”
8. This is not a case where the Assessing Officer, after being conscious of the institution of the Appeal, has nevertheless deemed it appropriate to exercise the powers under Section 275(1)(a) of the IT Act. The Assessing Officer has only observed that since the ITBA data did not reflect the institution of the quantum Appeal, the Assessing Officer felt that he had no alternative but to impose a penalty.
9. Thus, this is not a case where the penalty was imposed after independent application of mind. The main grounds for imposing the penalty were because the Assessing Officer felt that he had no alternative but to impose the penalty in the absence of the ITBA portal, reflecting the institution of the quantum Appeal by the Petitioner.
10. The Petitioner had pointed out that the quantum Appeal was indeed instituted. The Petitioner also produced the acknowledgment receipt evidencing the institution of the quantum Appeal. Because of a technical glitch, if this institution was not being reflected on the ITBA portal, no penalty should have been imposed by holding that the Assessing Officer had no alternative but to impose a penalty.
11. For the above reasons, we quash and set aside the impugned penalty order dated 8 February 2022. However, we clarify that the quashing of this order will not preclude the Respondents from initiating fresh proceedings for the imposition of penalty should they so desire upon the disposal of the Petitioner’s quantum Appeal before the Commissioner (Appeals).
12. With liberty in the above terms, we quash and set aside the impugned penalty order dated 8 February 2022 without any cost order.
13. Mr Jain states that the Petitioner will now withdraw/not press the Appeal against the impugned penalty order dated 8 February 2022 filed before the Commissioner (Appeals). This statement is accepted. Based upon this statement, the Petitioner’s Appeal against the penalty order before the Commissioner (Appeals) is disposed of as withdrawn. Mr Jain states that this order will be placed before the Commissioner (Appeals) within 15 days from today so that the Appeals can be shown as disposed of for statistical purposes.
14. The rule is made absolute in the above terms without any cost order. This Petition is disposed of in the above terms. All concerned are to act on an authenticated copy of this order.
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