2022 (6) TMI 475 - AT - Income Tax

Revision u/s 263 - Levy of penalty under section 271(1)(c) - assessee had disclosed the income only after the survey was conducted on the premise of the assessee company and the return of income was filed by the assessee only after the receipt of the notice under section 148 - AO allowed the exemption under section 54G of the Act by passing the assessment order under section 147 r.w.s. 143(3) - PCIT has issued a notice under section 263 that the assessment order passed by the Assessing Officer dated 24.03.2016 is erroneous and prejudicial to the interest of Revenue on the ground that the Assessing Officer has not examined the claim made by the assessee under section 54G - HELD THAT - By considering the detailed reply filed assessee, the ld. PCIT set aside the assessment order passed by the Assessing Officer dated 24.03.2016 and directed him to examine the claim made under section 54G of the Act and redo the assessment afresh in accordance with law after giving due opportunity of being heard to the assessee by order dated 27.03.2018. The very revision order passed under section 263 of the Act by the ld. PCIT dated 27.03.2018 was subject matter in appeal before the Tribunal. Vide order in 2022 (5) TMI 1090 - ITAT CHENNAI the Tribunal upheld the revision order passed under section 263 of the Act. In view of the above, the penalty levied by the Assessing Officer under section 271(1)(c) of Act and confirmed by the ld. CIT(A) cannot be adjudicated in the present penalty appeal. Therefore, we set aside the order passed by the ld. CIT(A) and remit the matter back to the file of the Assessing Officer to take appropriate action after passing the consequential order in pursuance to the order passed by the ld. PCIT under section 263 of the Act dated 27.03.2018. Thus, the ground raised by the assessee is allowed for statistical purposes.

Summary

Issues:
Levy of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Detailed Analysis:
1. The appeal was against the order confirming the penalty under section 271(1)(c) of the Act for the assessment year 2012-13. The assessee, M/s. IRIS Engineering Industries Pvt. Ltd., did not file a return of income within the allowed period. A survey revealed the sale of property to M/s. Lakshmi Machine Works Ltd. The Assessing Officer determined long term capital gains. Penalty proceedings were initiated due to non-filing of return. The assessee contended that the income was disclosed after the survey, and there was no intention to conceal income.

2. The Assessing Officer rejected the plea, stating it was a statutory obligation to disclose income timely. The penalty was imposed, considering the Supreme Court judgment in MAK Data P. Ltd. v CIT. The CIT(A) upheld the penalty, emphasizing that the assessee failed to disclose capital gains in the return. The assessee's argument of voluntary approach to the tax department was dismissed.

3. The Tribunal noted that the assessment order was set aside by the ld. PCIT, making the penalty proceedings questionable. The ld. Counsel argued that the penalty order was invalid due to the assessment's invalidity. The Tribunal observed that the assessment was revised by the PCIT, rendering the penalty appeal irrelevant. The matter was remitted back to the Assessing Officer for necessary action post the PCIT's revision.

4. The revision order under section 263 upheld by the Tribunal rendered the penalty appeal inconsequential. The penalty levied by the Assessing Officer was set aside, and the matter was remitted back for further action post the revision order. The appeal was allowed for statistical purposes.

This detailed analysis covers the issues related to the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961, as per the judgment delivered by the Appellate Tribunal ITAT Chennai.