Case Law Details
Bharat Rana Chaudhry Vs ITO (ITAT Delhi)
ITAT find that sub-clause (iii) of section 271(l)(c) provides mechanism for quantification of penalty. It contemplates that the assessee would be directed to pay a sum in addition to taxes, if any, payable him, which shall not be less than but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of income and furnishing of inaccurate particulars of income.
In other words, the quantification of the penalty is dependent upon the additions made to the income of the assessee. Upto and until the issue regarding determination of the taxable income is finalized, penalty under section 271(1)(c) of the Act cannot be imposed upon the assessee.
The determination of taxable income of the assessee is presently sub-judiced before the CIT(A) owing to the order of the ITAT in quantum proceedings in ITA No.3838/Del/2019 (supra). After adjudication the issue of quantum on merit, it will be in the discretion of the CIT(A) to consider the appropriate modification in penalty amount on the issue against the assessee in accordance with law. The appeal is thus set aside and restored to the file of CIT(A) for fresh adjudication in the light of outcome of quantum appeal.
FULL TEXT OF THE ORDER OF ITAT DELHI
The captioned appeal has been filed at the instance of the assessee against the order of the Commissioner of Income Tax (Appeals)-I, Noida (‘CIT(A)’ in short), dated 28.03.2018 arising in the assessment order dated 30.03.2015 passed by the Assessing Officer (AO) under Section 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2012-13.
ITA No.3838/Del/2019
2. The grounds of appeal raised by the assessee reads as under:
“1. Because the Commissioner of Income tax (Appeals) has erred in law and on facts in passing the impugned order under section 250 of I.T. Act arbitrarily without going into the bare facts of the case.
2. Because the Commissioner of Income tax (Appeals) has erred in law and on facts in passing the impugned order without affording proper opportunity of being heard to the Appellant as no fixture of appeal notice has ever been served upon the Appellant.
3. Because the Commissioner of Income tax (Appeals) has erred in law and on facts in passing the impugned order without appreciating the facts of the case and without considering the grounds of appeal taken before him by the Appellant.
4. Because the Commissioner of Income tax (Appeals) has erred in law and on facts in passing the impugned order under section 250 of I.T. Act, which cannot be considered to be an speaking order.
5. Because the Commissioner of Income tax (Appeals) has erred in confirming the Order of the Ld AO, against which, the Appellant was seeking a relief from 1% of the Net Profit assessed and later on the Appeal was dismissed.
6. Because the Commissioner of Income Tax(Appeals) has erred on facts in confirming the impugned order of Ld. AO in which the AO had assessed an Income of Rs. 5725848.00 after randomly applying the net profit rate of 1% of the turnover arbitrarily without forming any basis thereof.
7. Because the Commissioner of Income tax (Appeals) has erred in law and on facts in confirming the impugned addition of Rs. 53258717.00 by arbitrarily adding the sundry creditors under section 68 of I.T. Act to the Income of the Appellant, without hearing the Appellant.
8. Because the Commissioner of Income tax (Appeals) has erred in law and on facts in confirming the impugned addition of RS.3,56,200/- made by the ld. AO on the basis of AIR without going into the facts & circumstances of the case.
9. Because the Commissioner of Income tax (Appeals) has erred in law and on facts in confirming the impugned addition of Rs.45,600/- under section 69 of I.T. Act made by the ld. AO on account of addition made in the fixed assets, the source of which could not be examined at the time of appeal proceedings.
3. The order of the CIT(A) which is sought to be impugned in the captioned appeal reads as under:
“The present appeal is filed by the appellant against an assessment order dated 30/03/2015 passed by the Id. A.O. u/s.143(3) of I.T. Act, 1961 for A.Y. 2012-13 on a total income of Rs.5,93,86,370/-against return income of Rs. (-} 4,25,325/- Aggrieved by the same* the appellant has preferred the present appeal.
2. The appeal of the appellant was fixed for hearing for 25/09/2017 and again for 18/10/2017, There has been no response. Neither the appellant has entered appearance nor any request for adjournment has been’ received. As the appellant is not keen on prosecuting its appeal the same is dismissed for want of prosecution. The impugned assessment order stands confirmed.”
4. It is evident from the reading of the first appellate order that the CIT(A) has dismissed the appeal of the assessee summarily for want of prosecution owing to non attendance on two occasions. It is noticed that while dismissing the appeal of the assessee in limine, the CIT(A) has not rendered any decisions on merits as obligated under Section 250(6) of the Act. It is thus seen that the order of the CIT(A) suffers from the violation of principles of natural justice and hence requires to be set aside for fresh adjudication on merits without any demur.
5. Section 250(6) of the Act enjoins that CIT(A) shall state the points for determination before it and the decision shall be rendered on such points along with the reasons for the decision. It was thus incumbent upon the CIT(A) to deal with the grounds on merits even in an ex-parte order. A bare glance of the order of the CIT(A) shows that CIT(A) has not addressed itself on various points placed for its determination at all and dismissed the appeal of the assessee for default in appearance. Needless to say the CIT(A) plays a role of both adjudicating authority as well as appellate authority. Thus, the CIT(A) could not have shunned the appeal for non compliance without addressing the issue on merits.
6. In the totality of circumstances, we consider it just and expedient to restore the matter back to the CIT(A) in the larger interest of justice with a view to enable the assessee to avail proper opportunity for disposal of appeal by the CIT(A) on various points. Needless to say, the assessee shall extend full co-operation to the CIT(A) without any demur, failing which, the CIT(A) shall be at liberty to conclude the appellate proceedings in accordance with law. Hence, the order of the CIT(A) appealed against, is set aside and all the issues raised in the impugned appeal are restored back to the file of the CIT(A) for fresh adjudication in accordance with law after giving reasonable opportunity of hearing to the assessee.
7. In the result, the appeal of the assessee is allowed for statistical purposes.
ITA No.3837/Del/2019
8. The captioned appeal by the Assessee is directed against the order of the Commissioner of Income Tax (Appeals)-, Noida, [CIT(A) in short] dated 28.03.2018 relevant to Assessment Year 2006-07 whereby action of the CIT(A) in confirming the penalty of Rs.1,81,97,948/- imposed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) has been assailed by the Assessee.
9. As noted, the solitary grievance in the present appeal is against the imposition of penalty levied under Section 271(1)(c) of the Act.
10. The Ld. DR relied upon the order of the CIT(A).
11. The Ld. AR for the assessee submitted that the addition amounting to Rs.5,32,58,717/- in the quantum proceedings agitated in ITA No.3838/Del/2019 has resulted in the penalty proceedings under Section 271(l)(c) of the Act.
12. On due consideration of the facts and circumstances of the case, we find that sub-clause (iii) of section 271(l)(c) provides mechanism for quantification of penalty. It contemplates that the assessee would be directed to pay a sum in addition to taxes, if any, payable him, which shall not be less than but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of income and furnishing of inaccurate particulars of income. In other words, the quantification of the penalty is dependent upon the additions made to the income of the assessee. Upto and until the issue regarding determination of the taxable income is finalized, penalty under section 271(l)(c) of the Act cannot be imposed upon the assessee. The determination of taxable income of the assessee is presently subjudiced before the CIT(A) owing to the order of the ITAT in quantum proceedings in ITA No.3838/Del/2019 (supra). After adjudication the issue of quantum on merit, it will be in the discretion of the CIT(A) to consider the appropriate modification in penalty amount on the issue against the assessee in accordance with law. The appeal is thus set aside and restored to the file of CIT(A) for fresh adjudication in the light of outcome of quantum appeal.
13. In the result, the appeal of the assessee is allowed for statistical purposes.
14. In the combined result, both the appeals of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 31/05/2022.
