2019 (5) TMI 1318 - AT - Income Tax

Levy of penalty u/s 271AAB - no prior approval taken from the concerned Joint Commissioner of Income Tax (JCIT) - HELD THAT - Penalty u/s 271AAB which falls in Chapter XXI of the Act shall not be imposed by the Assessing Officer until and unless prior approval is taken from the concerned Joint Commissioner of Income Tax (JCIT). The use of word shall make it mandatory to take the prior approval of the JCIT / Additional CIT before passing the order imposing the penalty under section 271AAB of the Act. In the present case it is crystal clear from the penalty order passed by the Assessing Officer that the order was passed on 29/09/2016 while the approval from the Additional CIT, Range Ludhiana was accorded vide letter no. 1036 dt. 30/09/2016, which clearly established that the penalty order was passed by the Assessing Officer on 29/09/2016 before taking the approval from the concerned Additional CIT / J.C.I.T. The contention of the Ld. DR that the same may be a typographical mistake is not tenable because the relevant column of approval letter No. and Date had been left blank in the penalty order which have been filled with pen on receipt of said approval letter and the date mentioned falls after the date of pronouncement of impugned penalty order. Therefore, the penalty order passed by the Assessing Officer for levying the penalty under section 271AAB of the Act is void abinitio - Decided in favour of assessee

Summary

Issues:
Appeal against penalty under section 271AAB of the Income Tax Act for Assessment Year 2014-15 without prior approval from Joint Commissioner.

Analysis:
The judgment pertains to appeals filed against the orders of the Commissioner of Income Tax (Appeals) regarding the levy of penalties under section 271AAB of the Income Tax Act. The main issue in focus is the absence of prior approval under section 274(2) of the Act before imposing the penalty. The first appeal, ITA No. 265/Chd/2018, challenged the penalty of ?7,00,000 imposed by the Assessing Officer. The assessee contended that the penalty was void abinitio as the Assessing Officer did not obtain prior approval before passing the penalty order. The relevant provision, section 274(2) of the Act, mandates obtaining prior approval from the Joint Commissioner before imposing penalties exceeding a specified amount. The penalty order was passed on 29/09/2016, while approval was granted on 30/09/2016, indicating a procedural lapse. The contention of a typographical error was dismissed, and it was held that the penalty order was void abinitio due to the absence of prior approval. Consequently, the penalty levied under section 271AAB was deemed invalid and deleted.

Moving to ITA No. 266/Chd/2018, the facts mirrored those of ITA No. 265/Chd/2018, with the only difference being the penalty amount. As the issue regarding prior approval remained consistent, the penalty imposed in this appeal was also found to be void abinitio and was subsequently deleted. The judgment emphasized the mandatory nature of obtaining prior approval from the Joint Commissioner before imposing penalties under section 271AAB. Both appeals were allowed in favor of the assessees, and the penalties were set aside. The order was pronounced in open court on 21.05.2019, highlighting the resolution of the appeals concerning the procedural irregularity in imposing penalties under the Income Tax Act.