2021 (5) TMI 386 - AT - Income Tax

Penalty proceedings u/s. 271(1)(c) - Addition on account of interest income from FDRS, on RGCTP and JNNURM projects - As submitted that since the Tribunal has set aside the order passed by the Ld. Pr. CIT passed u/s. 263 of the Act affirming the action of the AO in dropping the penalty proceedings u/s. 271(1)(c) of the Act, the present appeal filed by the Revenue has become infructuous - HELD THAT - As perused the order dated 2019 (5) TMI 1868 - ITAT CHANDIGARH passed by the Co-ordinate Bench of the Tribunal, whereby the Coordinate Bench has set aside the order passed by the Pr. CIT u/s. 263 of the Act and affirmed the action of the AO in dropping penalty proceedings against the assessee. As pointed out by assessee, since the Tribunal has set aside the order passed u/s. 263 of the Act, directing the AO to initiate penalty proceedings, the order passed by the AO has become void ab initio. Hence, in view of the submissions made by the Ld. Counsel for the assessee in the light of the facts and the circumstances of the case, we dismiss the present appeal holding that the same has become infructuous.

Summary

Issues:
1. Challenge to the order of the Ld. CIT(A) setting aside penalty under section 271(1)(c) of the Income Tax Act.
2. Appeal against the order passed by the Ld. CIT(A) without appreciating the facts of the case.
3. Dispute over the penalty imposed for concealment of income by the assessee.

Issue 1: Challenge to Ld. CIT(A) Order on Penalty under Section 271(1)(c):
The Revenue filed appeals against the Ld. CIT(A)'s order setting aside penalty orders under section 271(1)(c) for the assessment years 2010-11 and 2011-12. The AO had initiated penalty proceedings against the assessee for concealing income, but dropped them following an ITAT order. However, the Ld. Pr. CIT revised this decision, leading to the imposition of penalties. The Ld. CIT(A) subsequently directed the AO to delete the penalties. The Revenue challenged this decision, arguing that the Ld. CIT(A) erred in allowing the appeal without considering the facts and in not appreciating that the penalty was imposed for furnishing inaccurate income particulars.

Issue 2: Appeal Against Ld. CIT(A) Order:
The Revenue contended that the Ld. CIT(A) erred in allowing the appeal without fully assessing the case. The grounds of appeal highlighted the failure to appreciate the facts, the penalty order being deemed infructuous, and the alleged inaccurate particulars furnished by the assessee. The Revenue sought to add or amend grounds before the appeal's disposal.

Issue 3: Dispute Over Penalty for Concealment of Income:
The Ld. Counsel for the assessee argued that since the Tribunal set aside the Ld. Pr. CIT's order directing penalty proceedings, the Revenue's appeal had become infructuous. The Ld. DR did not dispute this assertion, confirming that the AO had dropped the penalty proceedings based on a previous ITAT decision. The Tribunal reviewed the case records and the ITAT's order, concluding that the penalty order became void due to the Tribunal's decision. Consequently, the Tribunal dismissed the appeal, deeming it infructuous for both assessment years.

In summary, the appellate tribunal dismissed the Revenue's appeals challenging the Ld. CIT(A)'s decision to set aside penalties under section 271(1)(c) for the assessment years 2010-11 and 2011-12. The Tribunal found that the penalties were void ab initio following the Tribunal's earlier decision, rendering the Revenue's appeals infructuous. The Tribunal's detailed analysis considered the facts, legal provisions, and the impact of previous orders, leading to the dismissal of the appeals.