2020 (11) TMI 597 - AT - Income Tax

Penalty u/s.271(1)(c) - grievance of the Revenue in this appeal is the deletion of penalty by CIT-A - HELD THAT - CIT(Appeals) is fortified by the judgment of the Hon'ble Supreme Court in the case of Mohd. Mohatram Farooqui 2010 (2) TMI 1122 - SUPREME COURT in which it has been held that if addition is restored to the Assessing Officer, then penalty should also be restored. In Sanjay Gupta vs. CIT 2014 (5) TMI 860 - DELHI HIGH COURT has also held that where the quantum has been remanded to the Assessing Officer, the question of penalty on account of the said amount being treated as undisclosed income, should also be remanded to the Assessing Officer. In the present case in hand, since the quantum appeal has been restored to the Ld. CIT(Appeals), the penalty levied u/s.271(1)(c) of the Act is also restored to the file of the Ld. CIT(Appeals) for fresh adjudication - Appeal of the Revenue is allowed for statistical purposes.

Summary

Issues: Deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961

Analysis:
1. Issue of Penalty Deletion: The appeal by the Revenue challenges the deletion of a penalty amounting to ?4,50,12,760 under section 271(1)(c) of the Income Tax Act, 1961. The penalty was initially levied by the Assessing Officer but was subsequently deleted by the Ld. CIT(Appeals) in a previous order dated 24.05.2016 for the assessment year 2014-15.

2. Restoration of Penalty: The Ld. AR for the assessee argued that since the quantum appeal had been restored to the file of the Ld. CIT(Appeals) by the Pune Bench of the Tribunal in a previous order, the penalty under section 271(1)(c) should also be restored to the Ld. CIT(Appeals) for fresh adjudication. The Ld. DR representing the Revenue agreed with this submission.

3. Legal Precedents: The Tribunal, after considering the arguments from both parties and the relevant order regarding the quantum appeal, decided to restore the penalty to the Ld. CIT(Appeals) for fresh adjudication. This decision was influenced by the judgment of the Hon'ble Supreme Court in the case of Mohd. Mohatram Farooqui vs. CIT and the ruling of the Hon'ble Delhi High Court in Sanjay Gupta vs. CIT. These judgments emphasized that if the quantum appeal is remanded, the penalty should also be remanded for consideration.

4. Final Decision: Given that the quantum appeal had been restored to the Ld. CIT(Appeals), the ITAT Pune ordered the restoration of the penalty under section 271(1)(c) of the Act to the Ld. CIT(Appeals) for fresh adjudication. The appeal of the Revenue was allowed for statistical purposes, and the order was pronounced on 16th October 2020.