2015 (5) TMI 1235 - AT - Income Tax

Penalty levied u/s 271(1)(c) - appeal against the quantum addition made by the Assessing Officer before the Commissioner of Income Tax (Appeals) was withdrawn by the assessee - CIT (Appeals) power to allow withdrawal of appeal - HELD THAT - It is not in dispute that assessee filed an appeal against the quantum addition made by the AO before the CIT (Appeals). However, the said appeal was withdrawn by the assessee. It is not known how the CIT (Appeals) permitted the assessee to withdraw the appeal filed before him, when he has no such power to allow the assessee to withdraw the appeal. This Tribunal is of the considered opinion that when appeal was filed before the Commissioner of Income Tax (Appeals), the CIT(A) is bound to dispose of the same on merits. Since the appeal was withdrawn by the assessee, the Commissioner of Income Tax (Appeals) dismissed the appeal as withdrawn and confirmed the penalty levied by the Assessing Officer without any appreciation of materials available on record. It is well settled principles of law that assessment proceedings and penalty proceedings are separate and distinct and therefore, Assessing Officer is excepted to reappreciate the materials available on record. Likewise, when the appeal filed before the Commissioner of Income Tax (Appeals), the Commissioner of Income Tax (Appeals) is also expected to reappreciate the materials available on record while disposing the appeal filed by the assessee. In this case, Commissioner of Income Tax (Appeals) without reappreciation of the materials available on record, simply dismissed the appeal on the ground that appeal against the order of assessment was withdrawn. This Tribunal is of the opinion that merely because appeal was withdrawn by the assessee that cannot be a reason for confirming penalty levied by the Assessing Officer and the Commissioner of Income Tax (Appeals) has to independently examine the materials available on record. Accordingly, the order of the Commissioner of Income Tax (Appeals) is set aside and the issue of penalty is remitted back to the file of the Commissioner of Income Tax (Appeals). Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
Appeal against penalty under section 271(1)(c) of the Act for the assessment year 2008-09 based on the withdrawal of appeal against quantum addition made by the Assessing Officer before the Commissioner of Income Tax (Appeals).

Analysis:
The appeal was directed against the penalty levied under section 271(1)(c) of the Act for the assessment year 2008-09, confirming the penalty imposed by the Commissioner of Income Tax (Appeals)-III, Chennai. The Assessing Officer had levied a penalty on the ground that the assessee concealed particulars of income. The representative for the assessee clarified that although an appeal was filed against the quantum addition made by the Assessing Officer, it was later withdrawn by the assessee. The Commissioner of Income Tax (Appeals) confirmed the penalty based on the withdrawal of the appeal against the quantum addition. The Departmental Representative supported the orders of the lower authorities.

Upon considering the submissions from both sides and perusing the relevant material on record, the Tribunal noted that the Commissioner of Income Tax (Appeals) had dismissed the appeal as withdrawn and confirmed the penalty without properly appreciating the materials available on record. The Tribunal emphasized that assessment proceedings and penalty proceedings are separate and distinct, requiring a reappreciation of materials by the authorities. The Commissioner of Income Tax (Appeals) was expected to independently examine the materials available on record before confirming the penalty. Therefore, the Tribunal set aside the order of the Commissioner of Income Tax (Appeals) and remitted the issue of penalty back to the Commissioner of Income Tax (Appeals) for reconsideration. The Commissioner of Income Tax (Appeals) was directed to reevaluate the levy of penalty in accordance with the law, providing a reasonable opportunity of hearing to the assessee and passing a speaking order with detailed reasons for the conclusion reached.

In conclusion, the appeal of the assessee was allowed for statistical purposes, and the Commissioner of Income Tax (Appeals) was instructed to reassess the penalty issue based on a thorough reevaluation of the materials available on record.