2018 (9) TMI 1093 - AT - Income Tax

Penalty u/s 271(l)(c) - non recording of mandatory satisfaction as per law - Held that - The original assessment order passed u/s 143(3)/147 has been partially confirmed by the CIT(A) and addition of ₹ 20,40,399/- was deleted. Thus, the penalty for original assessment order does not sustain in toto but partially. Therefore, it will be appropriate to remand back this issue to the file of the Assessing Officer as there is no order giving effect to the CIT(A) s order. The matter is remanded back to the file of the Assessing Officer. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice - Appeal of the assessee is partly allowed for statistical purpose.

Summary

Issues:
Appeal against imposition of penalty u/s 271(l)(c) without satisfaction recorded, confirmation of penalty order beyond jurisdiction, violation of principles of natural justice, additions in assessment order contrary to law and facts, failure to comply with directions given in quantum proceedings, penalty imposed without serving appeal effect order, failure to discharge burden of proving concealment of income or furnishing inaccurate particulars.

Analysis:
1. The appeal was filed against the imposition of a penalty under section 271(l)(c) without the mandatory "satisfaction" being recorded. The CIT(A) confirmed the penalty without considering the jurisdictional limitations, violation of natural justice, incorrect findings, and failure to follow the law. The appellant argued that the penalty order should be quashed due to these reasons.

2. The original assessment order under section 143(3) made additions on unexplained sundry creditors. The CIT(A) directed the Assessing Officer to verify certain creditors and deleted a substantial amount from the addition. However, before giving effect to the CIT(A)'s order, the Assessing Officer imposed the penalty under section 271(l)(c). The appellant contended that the penalty order should be deleted as the effect of the CIT(A)'s order was not considered.

3. The CIT(A) dismissed the appeal without acknowledging the partial deletion of the addition made by the CIT(A) in the original assessment order. The appellant argued that since a significant portion of the addition was deleted by the CIT(A), the penalty order should not be sustained in its entirety.

4. The tribunal observed that the original assessment order was partially confirmed by the CIT(A) with a substantial amount being deleted from the addition. As there was no order giving effect to the CIT(A)'s decision, the tribunal remanded the issue back to the Assessing Officer for proper consideration. The appellant was granted an opportunity of hearing in accordance with the principles of natural justice.

5. Consequently, the tribunal partly allowed the appeal for statistical purposes, emphasizing the need for proper compliance with the CIT(A)'s order before imposing penalties. The decision was pronounced in open court on 17th September 2018.