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.
