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2017 (2) TMI 590 - AT - Income TaxPenalty u/s 271(1)(c) - exemption u/s 11&12 denied - CIT-A issued an alert to the Assessing Officer to take cognizance of the appellant entity losing its status of trust and the income accruing thereof becoming the right of two individuals as a consequence of the decision of the Additional Civil Judge, Chandigarh and take necessary consequential actions/remedies, should it be considered appropriate - Held that - We find that it is an undisputed fact that the above said orders passed by ld. CIT(A) relate to the penalties imposed by Assessing Officer u/s 271(1) (c) of the Act. It is also undisputed fact that the ld. CIT(A) has allowed relief and had deleted the penalties in these orders. The powers of CIT(A), while disposing of the appeals relating to penalties are contained in Sec.251(1)(b) of the Act. While dealing with the penalty matters, the ld. CIT(A) has limited powers by which he may confirm or cancel such penalties or may reduce or enhance such penalty. No other power has been mentioned in the said section. The Hon ble High Court of Allahabad in Commissioner Of Income-Tax, Uttar Pradesh Versus Rameshwardas Ram Narain 1974 (12) TMI 12 - ALLAHABAD High Court has considered the similar issue and has held that appellate Assistant Commissioner had no jurisdiction to make the direction of the kind that he made in the appellate order. - Decided in favour of assessee
Issues involved:
- Appeal against order of ld. CIT(A) - Action of ld. CIT(A) recording an alert in the appellate order - Grounds of appeal by the assessee - Imposition of penalties for concealment of income u/s 271(1)(c) of the Act - Powers of Income Tax Commissioner (Appeals) U/s 251(1) of the Act - Judicial precedents regarding powers of appellate authorities in penalty matters Analysis: 1. Appeal against order of ld. CIT(A): The judgment involves four appeals filed by the assessee against the order of ld. CIT(A), Bathinda, for different assessment years. The appellant was aggrieved by the action of ld. CIT(A) recording an alert in the appellate order. 2. Action of ld. CIT(A) recording an alert: The ld. CIT(A) issued an alert in the appellate order directing the Assessing Officer to take cognizance of the appellant entity losing its status as a trust. This alert was based on a decision of the Additional Civil Judge, Chandigarh, regarding the income accruing to the trust becoming the right of two individuals. The appellant challenged this alert in the appeal. 3. Grounds of appeal by the assessee: The assessee raised various grounds of appeal, questioning the authority of ld. CIT(A) to issue the alert and the timing of such directions considering legal proceedings pending in higher courts. The appellant sought relief from the consequences of losing trust status and the income implications thereof. 4. Imposition of penalties for concealment of income: The penalty orders were imposed by the Assessing Officer under section 271(1)(c) of the Act due to the appellant's claim of exempt income under sections 11 and 12 being disallowed. The ld. CIT(A) deleted the penalties, prompting the appellant to file further appeals. 5. Powers of Income Tax Commissioner (Appeals) U/s 251(1) of the Act: The appellant argued that the powers of ld. CIT(A) in penalty matters are limited to confirming, canceling, enhancing, or reducing penalties as per section 251(1)(b) of the Act. Citing relevant case laws, the appellant contended that the ld. CIT(A) exceeded his jurisdiction by issuing the alert beyond the specified powers. 6. Judicial precedents regarding powers of appellate authorities in penalty matters: The judgment extensively discussed judicial precedents from various High Courts regarding the powers of appellate authorities in penalty matters. The decisions highlighted that appellate authorities have specific limitations in altering penalty orders, emphasizing that they cannot issue directions beyond the scope of the statutory provisions. Based on these precedents, the Tribunal ordered the deletion of the alert issued by ld. CIT(A). In conclusion, the Tribunal allowed the appeals filed by the assessee based on the analysis of the issues surrounding the alert issued by ld. CIT(A) and the constraints on the powers of appellate authorities in penalty matters as per the relevant statutory provisions and judicial precedents.
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