Case Law Details
Ravi Nirman Nigam Ltd Vs ACIT (ITAT Mumbai)
Introduction: Penalty u/s. 271D and 271E of the Income Tax Act, 1961 cannot be levied if the assessment proceedings are quashed.
Facts of the case: The assessee’s case was reopened u/s. 147 of the Act based on information received from the office of, ACIT, Central Circle-2(4), Ahmedabad. A search was conducted at the premises of Dharmadev Infrastructure Limited, and 36 benami accounts were identified out of which one of them belonged to the asssessee. There were deposits in this account which included cash deposits. In the same reassessment proceedings, the AO had alleged that there were certain transactions of loan taken and repaid, which were carried out by the assessee in violation of section 269SS and 269T of the Act. The AO was not satisfied by the explanations furnished by the assessee and hence initiated penalty proceedings u/s. 271D and 271E of the Act. Consequently, a penalty order was passed confirming the penalty.
Meanwhile, the assessee had challenged the reassessment proceedings u/s. 147 of the Act before Hon’ble Mumbai ITAT. Before the Hon’ble ITAT, the assessee had taken a specific ground for the penalty levied. The Hon’ble ITAT quashed the reassessment order by holding that any material found during the search can be applied to initiate proceedings u/s. 153C of the Act, not u/s. 147 of the Act.
Against the penalty order, the assessee filed an appeal before CIT(A) wherein it was argued that when the reassessment proceeding itself has been quashed, the penalty proceedings so initiated by the AO should not survive and therefore the penalty so imposed ought to be deleted. The CIT(A) did not accept the claim of the assessee and confirmed the levy of penalty.
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