2023 (8) TMI 915 - AT - Income Tax

Penalty levied u/s 271(1)(c) - application for condonation of delay rejected - assessee filed appeal after delay of 25 months - disallowance of exemption u/s 11(1)(d) and disallowance of expenses - as per assessee they were not served penalty order and/ or that came to know about the impugned penalty order only on 13.05.2021 - HELD THAT - We find that assessee has filed copy of screenshot of the inbox of email of [email protected], on careful perusal of such screenshot, we find that it shows only mail received from [email protected] is about the show cause notice and there is no mail regarding order under section 271(1)(c) - CIT(A) has neither verified the facts pleaded by the assessee in his application of condonation of delay nor sought comment of assessing officer nor he verified the fact from e-mail of assessing officer, whether the impugned order was sent on registered e-mail or not. Thus, in absence of contrary evidence, we do not find any justification in rejecting the application for condonation of delay and in dismissing the appeal unadmitted. We further find that merit in the submission of assessee that assessee-trust were contesting all the proceedings in quantum assessment and ultimately succeeded. Therefore, there was no justification in dismissing the application of condonation of delay when the assessee has filed affidavit of one of the trustee deposing on oath that they never came to know about passing the impugned penalty order prior to 13.05.2021. We find one more reason that assessee ultimately succeeded in quantum assessment, much before filing appeal in penalty proceedings. In such peculiar situation the order of Ld. CIT(A) in dismissing the application for condonation of delay is set aside. As to merit of the case, we find that in appeal for quantum assessment, the addition on account of disallowance for exemption under section 11 as well as disallowance of expenses was deleted and the appeal of assessee was allowed by this Tribunal in 2020 (4) TMI 576 - ITAT SURAT therefore, the impugned penalty under section 271(1)(c) would not survive. Decided in favour of assessee.

Summary

Issues involved:
The appeal challenges the penalty levied under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2013-14, contending that the penalty should not stand in light of previous favorable decisions.

Summary of Judgment:

Issue 1 - Delay in filing appeal and service of penalty order:
The assessee argued that there was no delay in filing the appeal before the CIT(A) as the penalty order was not served on them until May 13, 2021. The assessee claimed they were unaware of the penalty order due to non-receipt of the notice through email. The Tribunal found merit in the submission that the delay was justified, especially considering the successful outcome in the quantum assessment.

Issue 2 - Justification for penalty imposition:
The assessing officer imposed the penalty under Explanation-1 to Section 271(1)(c) for deemed concealment of income. However, during the pendency of the quantum assessment appeal, the penalty proceedings were initiated without considering the pending appeal status. The Tribunal noted that the penalty would not stand as the additions/disallowances made in the quantum assessment were later deleted.

Issue 3 - Service of penalty order and condonation of delay:
The CIT(A) dismissed the appeal, asserting that the penalty order was served through the ITBA portal as per due procedure. However, the Tribunal observed that there was no evidence of the penalty order being sent to the registered email of the assessee. The Tribunal set aside the dismissal of the application for condonation of delay, emphasizing the lack of justification for rejecting the delay.

Conclusion:
Given the successful appeal outcome in the quantum assessment, where the additions were deleted, the Tribunal concluded that the penalty under section 271(1)(c) could not be upheld. Therefore, the appeal of the assessee was allowed, and the penalty was deemed not to survive.

Separate Judgment by Judges:
The order was pronounced by the Judicial Member, Shri Pawan Singh, on August 14, 2023.