2022 (1) TMI 121 - AT - Income Tax

Penalty u/s.271(1)(c) - disallowance of 54F - HELD THAT - Assessee challenged the addition in quantum proceedings before the Tribunal. The Tribunal 2021 (8) TMI 1266 - ITAT HYDERABAD set aside the issue to the file of CIT(A) for decision afresh after verification of relevant records. When the addition has been restored to the file of CIT(A), in our considered opinion, the penalty on this aspect should also be restored to the file of CIT(A) for taking a fresh decision in accordance with the view finally taken by him in respect of addition in quantum proceedings. Our view in restoring the matter to the file of the CIT(A) is fortified by the judgment of the Hon'ble Supreme Court in the case of Mohammed Mohatram Farooqui 2010 (2) TMI 1122 - SUPREME COURT . We, therefore, overturn the impugned order on this issue and restore the matter to the file of CIT(A). for taking a fresh decision after deciding the matter in quantum proceedings. Accordingly, the grounds raised by the revenue on this issue are allowed for statistical purposes.

Summary

Issues:
- Appeal against CIT(A)'s order for AY 2011-12 under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
1. The appeal by the Revenue contested the CIT(A)'s decision not to confirm the penalty imposed under section 271(1)(c) of the IT Act amounting to ?60,00,000 for AY 2011-12. The Revenue argued that the CIT(A)'s action was unjustified and arbitrary. The CIT(A) had held that the disallowance of exemption under section 54F could not be made for the relevant year and deleted the penalty. The Revenue contended that the CIT(A) should have appreciated the penalty levied by the Assessing Officer and confirmed it. The grounds of appeal also left room for any other issues that may arise during the appeal hearing.

2. The facts of the case involved the assessee, an individual and Director of a company, who filed a return of income for AY 2011-12, admitting a total income of ?27,81,730. During scrutiny assessment proceedings for AY 2012-13, it was discovered that the assessee had sold an immovable property resulting in taxable income under 'Long term capital gains' of ?2,74,53,961. The Assessing Officer (AO) reopened the assessment for AY 2011-12, determining the total income at ?3,03,47,939 and denying the assessee's claim of exemption under section 54F. The AO also initiated penalty proceedings under section 271(1)(c) for concealing income.

3. The assessee appealed against the assessment orders for AY 2011-12 and 2012-13 before the CIT(A), who dismissed both appeals. Subsequently, the ITAT remitted the issue back to the CIT(A) for fresh consideration. Meanwhile, the AO imposed a penalty of ?60,00,000 under section 271(1)(c) for AY 2011-12. The CIT(A) directed the AO to cancel the penalty, citing questionable addition of disallowed exemption under section 54F. The Revenue appealed this decision before the ITAT.

4. The ITAT considered that since the quantum proceedings were restored to the CIT(A) for fresh decision, the penalty issue should also be reconsidered by the CIT(A) in line with the final decision on the addition. Citing a Supreme Court judgment, the ITAT overturned the CIT(A)'s decision and remitted the penalty matter back to the CIT(A) for a fresh decision after resolving the quantum issue. The Revenue's appeal was allowed for statistical purposes.

This detailed analysis highlights the legal proceedings and decisions involved in the appeal against the CIT(A)'s order for AY 2011-12 under section 271(1)(c) of the Income Tax Act, 1961.