2023 (7) TMI 509 - HC - Income Tax

Penalty u/s 271(1)(c) - assessment order was no longer in existence - CIT(A) s order which was set aside by the Tribunal arose out of the earlier penalty order which in turn was founded on the assessment order - HELD THAT - Given these circumstances the impugned order is set aside. Consequently the order qua penalty proceedings will collapse.

Summary

Issues involved:
The assessment order dated 29.12.2011 and penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961 arising from it.

Assessment Order and Penalty Proceedings:
The petitioner challenged the order dated 26.12.2022 by the Income Tax Appellate Tribunal which was based on the order of the Commissioner of Income Tax (Appeals) dated 29.12.2017. The CIT(A) had considered an appeal against the order dated 18.03.2014 passed u/s 271(1)(c) of the Act for AY 2009-10. The Assessing Officer had imposed a penalty of Rs. 27,34,356/- on the petitioner. Despite no representation before the CIT(A), the petitioner claimed that the quantum levy imposed earlier was set aside by the Tribunal, leading to a fresh order by the AO pegging the assessed income at Rs. 3,21,390/-. This fresh order also directed interest under various sections and initiated penalty proceedings u/s 271(1)(c).

Contentions and Decision:
The petitioner argued that the Tribunal should not have remanded the matter as the original assessment order was no longer in existence after the fresh order of 29.06.2021. Although penalty proceedings were directed by the fresh order, none had been initiated. Consequently, the impugned order was set aside, leading to the collapse of the penalty proceedings dated 18.03.2014. It was clarified that any future penalty proceedings based on the fresh assessment order would not be impacted by the current decision. The writ petition was disposed of accordingly, with parties instructed to act based on the digitally signed copy of the order.