Case Law Details
Chaturbhoj Vs ITO (ITAT Delhi)
The case of Chaturbhoj Vs ITO was heard by the Income Tax Appellate Tribunal (ITAT) Delhi. The appeal was filed by the assessee against the penalty order issued under Section 271(1)(c) of the Income Tax Act. The ITAT held that if the matter is restored to the Assessing Officer for passing a rectification order, the penalty imposed under Section 271(1)(c) does not survive. This article provides an analysis of the case and its implications.
Analysis: The assessee submitted that the ITAT SMC Bench had already restored the matter to the file of the Assessing Officer for making necessary rectifications. Therefore, the penalty imposed under Section 271(1)(c) should be deleted as it does not survive. The learned Senior DR agreed that the matter was restored for rectification but argued that the Assessing Officer could take appropriate action for imposing the penalty based on the outcome of the rectification order.
After considering the submissions, the ITAT observed that the assessee had challenged the addition of long-term capital gain in the quantum appeal. The penalty was imposed by the Assessing Officer based on the same issue. Since the quantum appeal was restored for rectification, the penalty imposed on the assessee did not survive. The ITAT directed the Assessing Officer to delete the penalty. However, it clarified that the Assessing Officer could initiate and pass an appropriate penalty order under Section 271(1)(c) based on the outcome of the rectification order.
Conclusion: The ITAT Delhi, in the case of Chaturbhoj Vs ITO, ruled that if a matter is restored to the Assessing Officer for passing a rectification order, the penalty imposed under Section 271(1)(c) does not survive. The ITAT directed the Assessing Officer to delete the penalty in this case but clarified that the Assessing Officer could initiate penalty proceedings based on the outcome of the rectification order.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal filed by the assessee is directed against the order dated 04.08.2022 of the Ld. NFAC, New Delhi, relating to Assessment Year 2009-10.
2. The learned counsel of the assessee submitted a copy of the order of ITAT SMC Bench dated 25.05.2022 in ITA No. 846/Del/2021 for A.Y. 2009-10 pertaining to assessee’s appeal and submitted that the Tribunal has restored the matter for making necessary rectification to the file of AO. Therefore penalty levied u/s. 271(1)(c) of the Income Tax Act 1961, do not survive and thus the appeal of assessee may kindly be allowed deleting the penalty.
Alternatively, the learned counsel submitted that the issue of imposition of penalty u/s. 271(1)(c) depends upon the rectification order to be passed by the AO as per direction of the Tribunal by order dated 25.05.2022 (supra), therefore the penalty on this count also do not survive.
3. Replying to the above the learned Senior DR agreed that the Tribunal has restored the matter to the file of AO for passing rectification order. However, he submitted that the Assessing Officer is very well entitle to take appropriate action, if it is found necessary, for imposing penalty u/s. 271(1)(c) on the assessee as per outcome of rectification order.
4. On careful consideration of above, I am of the view that the assessee raised issue challenging the action of the AO and first appellate order wherein the assessee has challenge confirmation of addition on account of long term capital gain. From the penalty order, I further observed that the AO has imposed penalty on the same issue of addition on account of long term capital gain on sale of capital asset. Since the quantum appeal has been restored to the file of AO for passing rectification order therefore the penalty impose on the assessee u/s. 271(1)(c) of the Act, on the strength of earlier assessment order dated 31.03.2016 does not survive and we direct the AO to delete the same. Before I part with the order I make it clear that the Assessing Officer would be entitled for initiation of penalty and passing appropriate order u/s. 271(1)(c) of the Act, if it is found necessary as per outcome of rectification order passed in pursuant to the Tribunal order dated 25.05.2022.
7. In the result appeal of the assessee is disposed of in the manner as indicate above.
Order pronounced in the open court on 10.05.2023.
