2023 (6) TMI 507 - AT - Income Tax

Penalty levied u/s 271(1)(c) - disallowance of claim of amortization of premium payable on ZCB - demand has already been extinguished in the order passed NCLT - HELD THAT - We are of the view that the present appeal of the assessee does not require adjudication at all, as there cannot be any grievance to the assessee as the demand has already been extinguished, which fact has been accepted by the Ld CIT(A). The only apprehension of the assessee perhaps is that the AO may not nullify the demand, since the Ld CIT(A) has observed that he is dismissing the appeal as infructuous. In our view, this apprehension is unfounded, since the AO should necessarily nullify the demand following the order passed by NCLT and not on the basis of appellate orders passed under the Income tax Act. Assessee appeal allowed.

Summary

Issues:
Challenge to penalty under section 271(1)(c) of the Income Tax Act for assessment year 2014-15.

Analysis:
The appeal challenges a penalty order under section 271(1)(c) of the Income Tax Act for the assessment year 2014-15. Initially, the assessee claimed a deduction of premium payable on Zero Coupon Bonds (ZCB) on a pro-rata basis spread over the bond's period. Subsequently, following a Supreme Court decision, the assessee claimed the entire premium amount as a deduction for the year under consideration. The AO disallowed this claim and levied a penalty. The assessee argued that this was not a case of furnishing inaccurate particulars of income, citing legal precedents. The Department contended that the appeal was infructuous due to an order from the National Company Law Tribunal (NCLT) extinguishing the income tax dues. The CIT(A) dismissed the appeal as infructuous, leading to the current appeal before the Tribunal.

The Tribunal noted that the CIT(A) based his decision on the NCLT order extinguishing the demands, rendering the appeal infructuous. The CIT(A) did not address the issue on merits. The assessee argued on merits before the Tribunal, but the Department maintained that the appeal was unnecessary due to the NCLT order. The Tribunal agreed with the Department, stating that since the demand was extinguished by the NCLT order, there was no grievance for the assessee to file the appeal. The Tribunal held that there was no need to adjudicate on any grounds raised by the assessee, as the demand had already been nullified by the NCLT order, which the CIT(A) had accepted. The Tribunal concluded that the appeal was treated as allowed for statistical purposes.

In conclusion, the Tribunal found that the appeal challenging the penalty under section 271(1)(c) for the assessment year 2014-15 was unnecessary as the demand had been extinguished by the NCLT order. The Tribunal held that there was no grievance for the assessee to pursue the appeal further, as the demand had already been nullified. The appeal was treated as allowed for statistical purposes, as there was no necessity to adjudicate on the grounds raised by the assessee.