2022 (1) TMI 1097 - AT - Income Tax

Penalty u/s. 271(1)(C) - addition made u/s 40A(3), on account of cash deposit in the bank account as well as household existence - As argued assessee has not concealed any particulars of income nor furnished any inaccurate particulars - HELD THAT - The assessee challenged the additions made by the Assessing Officer before the CIT(A) in quantum appeal but the appeal of the assessee was dismissed by the CIT(A) for non-prosecution it. The Varanasi Bench of this Tribunal 2021 (11) TMI 1018 - ITAT VARANASI has set aside the issue to the record of the CIT(A) for fresh adjudication. Thus, it is clear that after the order of this Tribunal in quantum appeal the addition against which the penalty u/s. 27(1)(c) was levied by the Assessing Officer do not exist - Thus the matter is set aside to the record of the CIT(A) for deciding the same afresh as per the outcome of the quantum proceedings. Appeal of the assessee is allowed for statistical purpose.

Summary

Issues:
Appeal against penalty order under Section 271(1)(C) for AY 2009-10.

Detailed Analysis:

1. Grounds of Appeal:
The appellant challenged the penalty imposed under Section 271(1)(C) for AY 2009-10, contending that it was unjustified as there was no concealment of income or furnishing of inaccurate particulars. Additionally, the appellant raised concerns about the ex-parte nature of the order by CIT(A) without providing a reasonable opportunity for representation.

2. Assessment and Penalty Imposition:
The Assessing Officer made various additions during the assessment under Section 143(3), including amounts under Section 40A(3), cash deposits in the bank account, and household expenses. Subsequently, a penalty was levied under Section 271(1)(C) at 100% of the tax to be avoided. The appellant's challenge to the penalty before CIT(A) was unsuccessful.

3. Arguments Before Tribunal:
During the Tribunal proceedings, the appellant's representative argued that a quantum appeal decision by the Varanasi Bench of the Tribunal necessitated a fresh adjudication by CIT(A) regarding the penalty. The appellant sought to set aside the penalty based on the quantum appeal outcome. The Departmental Representative, on the other hand, relied on the lower authorities' orders.

4. Tribunal's Decision:
The Tribunal examined the submissions and records, noting that the CIT(A) had dismissed the appellant's quantum appeal for non-prosecution. Referring to the Varanasi Bench's decision, the Tribunal highlighted the need for proper opportunity and detailed reasoning in appellate proceedings. Consequently, the Tribunal remitted the matter back to CIT(A) for fresh adjudication based on the quantum appeal outcome, as the additions against which the penalty was imposed no longer existed post the quantum appeal decision.

5. Outcome and Conclusion:
Based on the above analysis, the Tribunal set aside the matter to the record of CIT(A) for reevaluation in line with the quantum proceedings. The appellant's appeal was allowed for statistical purposes, emphasizing the need for a fair and comprehensive reconsideration of the penalty imposition.

In conclusion, the Tribunal's decision focused on procedural fairness and the impact of the quantum appeal outcome on the penalty imposed under Section 271(1)(C) for the specified assessment year.