2012 (9) TMI 128 - HC - Income Tax

Restoring the issue of levy of penalty to the file of AO - whether ITAT has such powers? - Held that - As the appeal against the quantum proceedings has been admitted and is pending hearing in this Court the Tribunal, instead of deciding this issue as to penalty under section 271, by the impugned order restored the same to the file of the Assessing Officer with a direction to decide the issue of levy of penalty after the decision of this Court in the said appeal, thus no prejudice has been caused to the appellant even qua the penalty proceedings - apprehension that any order in the penalty proceedings may be barred by limitation under section 275(1A), is not well founded.

Summary

Issues: Appeal under section 260(A) of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal pertaining to the assessment year 1997-1998.

Analysis:

1. Issue of Levy of Penalty and Directions to Assessing Officer:
The appellant raised questions regarding the justification of the ITAT in restoring the issue of levy of penalty to the Assessing Officer with directions related to the decision-making process based on the High Court's quantum appeal. The Tribunal set aside the order of the CIT (A) and directed the Assessing Officer to reevaluate the penalty issue post the High Court's decision on the quantum appeal. The Tribunal's decision was based on the pending appeal against the quantum proceedings in the High Court. The Tribunal's actions were deemed appropriate given the circumstances, ensuring the appellant's opportunity to be heard before any penalty order was passed upon remand.

2. Validity of ITAT's Directions under Section 275(1A):
The appellant also questioned the ITAT's power to issue directions to the Assessing Officer under section 275(1A) concerning the passing of penalty orders based on the status of the relevant assessment. The Tribunal's authority to extend the time limit for passing the penalty order beyond the prescribed period was challenged. However, the Tribunal's decision was deemed reasonable and in line with the pending quantum proceedings in the High Court, ensuring no prejudice to the appellant in the penalty proceedings.

3. Bar on Limitation under Section 275(1A):
The judgment addressed the appellant's apprehension regarding the limitation under section 275(1A) for passing orders in the penalty proceedings. The Court dismissed the apprehension, assuring that if any order was found to be barred by limitation, the appeal would automatically revive without further orders. This clarification aimed to alleviate concerns regarding the potential impact of the limitation on the penalty proceedings, ensuring a fair and just resolution in the matter.

In conclusion, the High Court dismissed the appeal, considering the pending quantum proceedings and the Tribunal's directions to the Assessing Officer regarding the levy of penalty. The judgment provided clarity on the Tribunal's authority, the impact of pending appeals on penalty proceedings, and addressed concerns related to limitations under the Income Tax Act, ensuring a just and equitable resolution in the case.