2024 (8) TMI 166 - AT - Income Tax

Penalty u/s 271(1)(c) - additions made in the assessment - HELD THAT - As the original assessment-order which was the very basis for imposition of penalty u/s 271(1)(c) has already become non-est. When it so, there is no locus for the penalty-order to stand. Being so, we set aside the impugned penalty-order passed by AO. The AO is, however, at liberty to initiate fresh proceeding of penalty in accordance with law, if required on the basis of outcome of newer assessment-order. Assessee appeal allowed.

Summary

Issues:
Delay in filing appeal, Condonation of delay, Imposition of penalty u/s 271(1)(c), Locus standi of penalty-order post non-est assessment-order.

Analysis:

The judgment delivered by the Appellate Tribunal ITAT Indore involved several key issues. Firstly, the appeal was filed by the assessee against the order passed by the CIT(A) which arose from a penalty-order imposed by the ITO-2(4) under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 2007-08. The primary contention was the delay in filing the appeal, which was informed to be 204 days past the deadline. The assessee sought condonation of delay due to an accident resulting in a fractured leg and subsequent medical treatment, supported by medical records. The Tribunal, considering the explanation provided and the provisions of section 253(5) of the Act, decided to condone the delay and proceed with the hearing, emphasizing the importance of substantial justice over technical considerations.

Moving on, the background facts of the case were presented by the assessee's representative, highlighting that the assessment for the relevant assessment year had been completed by the AO, with subsequent penalty imposed under section 271(1)(c). However, the Tribunal noted that the assessment order, which formed the basis for the penalty, had become non-est due to a previous decision by the ITAT remanding the quantum matter back to the AO for fresh adjudication. Consequently, the Tribunal found that there was no basis for the penalty-order to stand and set it aside, allowing the appeal. The AO was granted the liberty to initiate fresh penalty proceedings if necessary based on any new assessment order outcomes.

In conclusion, the Tribunal allowed the appeal, emphasizing the importance of the assessment order's status as non-est in rendering the penalty-order without locus standi. The judgment was pronounced in open court on 26.07.2024, providing clarity on the issues of delay in filing the appeal, condonation of delay, imposition of penalty under section 271(1)(c), and the relevance of the assessment order in penalty proceedings.