2019 (3) TMI 361 - AT - Income Tax

Penalty u/s. 271(1)(c) - extended time limit for passing the impugned penalty order when the assessment order is the subject matter of appeal before the CIT(A) - HELD THAT - The impugned penalty order as well as the appellate order has been passed by the tax authorities before the disposal of the appeal in quantum assessment proceedings by the CIT(A). The assessee furnished a copy of the appellate order dt. 03-08-2018, passed in the quantum assessment proceedings as per which the appeal of the assessee is partly allowed. Accordingly, in the interest of natural justice, we are of the view that the issues contested in the present appeal requires re-examination at the end of the AO by duly considering the appellate order passed in the quantum assessment proceedings - restore all the issues to the file of AO for examining afresh - decided in favour of assessee for statistical purposes.

Summary

Issues:
Appeal against penalty levied under section 271(1)(c) of the Income Tax Act.

Analysis:
The appeal was filed challenging the penalty order passed under section 271(1)(c) of the Income Tax Act by the Ld. Commissioner of Income Tax (Appeals)-3, Mumbai. The assessment order was initially passed under section 143(3) of the Act on 23-12-2010. The appellant then appealed to the Ld. CIT(A), and the appeal was disposed of on 03-08-2018. However, before the receipt of the appeal order, the Assessing Officer passed the penalty order on 11-11-2013. The appellant argued that since the appeal was partly allowed by the Ld. CIT(A), the penalty order needed reconsideration by the AO after duly considering the appeal order. The contention was that the penalty order was passed before the appeal order in the quantum assessment proceedings, which was against the principles of natural justice.

The Tribunal found merit in the appellant's contentions and noted that both the penalty order and the appellate order were passed before the disposal of the appeal in the quantum assessment proceedings by the Ld. CIT(A). The appellant provided a copy of the appellate order dated 03-08-2018, which partially allowed the appeal. In the interest of natural justice, the Tribunal decided that the issues contested in the present appeal required re-examination by the AO after considering the appellate order in the quantum assessment proceedings. Consequently, the Tribunal set aside the order passed by the Ld. CIT(A) and remanded all the issues to the file of the AO for fresh examination, ensuring the appellant is given adequate opportunity to be heard.

Therefore, the appeal of the assessee was treated as allowed for statistical purposes, and the order was pronounced on the 5th day of March, 2019.