2017 (5) TMI 206 - AT - Income Tax

Penalty under section 271(1)(c) - Held that - As the quantum issues on the basis of which penalty under section 271(1)(c) of the Act for these years was levied do not now survive for consideration and, therefore, the said orders levying penalty under section 271(1)(c) of the Act being unsustainable, we cancel the same. Consequently, we allow the assessee s appeals for assessment years 2001-02 to 2004-05 seeking the deletion of penalty levied under section 271(1)(c) of the Act. - Decided in favour of assessee.

Summary

Issues:
Appeal against penalty under section 271(1)(c) of the Income Tax Act, 1961 for assessment years 2001-02 to 2004-05.

Analysis:

Issue 1: Ex-parte Dismissal and Recall of Orders
The assessee's appeals were dismissed ex-parte initially due to non-prosecution. Subsequently, miscellaneous applications were filed seeking recall of the ex-parte order. The reasons included the assessee's absence and the setting aside of issues by the Coordinate Bench for fresh examination. The Tribunal, in the interest of equity and justice, recalled the ex-parte orders and decided to hear the appeals afresh.

Issue 2: Challenge to Penalty Imposition
The assessee challenged the penalty under section 271(1)(c) of the Act for assessment years 2001-02 to 2004-05. The basis for the penalty, i.e., the quantum additions made by the authorities, had been set aside by the Coordinate Bench for fresh examination and adjudication. The assessee contended that since the issues forming the basis of the penalty were set aside, the penalty itself was unsustainable.

Issue 3: Analysis of Coordinate Bench's Order
The Coordinate Bench set aside the quantum additions forming the basis of the penalty. It found discrepancies in the assessment related to agricultural income and a credit entry in the books of account. The Bench directed the Assessing Officer to reexamine the issues, verify agricultural income from revenue records, and investigate the credit entry. The Bench emphasized fair play and justice, allowing the appeals for statistical purposes.

Issue 4: Tribunal's Decision
Considering the Coordinate Bench's decision to set aside the quantum issues for fresh examination, the Tribunal concluded that the penalty under section 271(1)(c) of the Act was unsustainable. Consequently, the Tribunal canceled the penalty levied for the assessment years 2001-02 to 2004-05 and allowed the assessee's appeals seeking the deletion of the penalty.

In conclusion, the Tribunal allowed the assessee's appeals for assessment years 2001-02 to 2004-05, canceling the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The decision was based on the setting aside of quantum issues by the Coordinate Bench for reexamination and fresh adjudication, emphasizing fairness and justice in the proceedings.