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TMI Blog2022 (6) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... deleted the penalty levied under section 271(1)(c) by holding that A.O. had erroneously applied the provisions of Section 271(1)(c) however directed the A.O. to initiate penalty proceedings under section 271AAA - HELD THAT:- We find an identical issue arose before the Hon ble Kerala High Court in the case of CIT vs., Eminent Enterprises [ 1992 (6) TMI 20 - KERALA HIGH COURT] as held that it is not open to the First Appellate Authority i.e., Ld. CIT(A) to set aside the order of the A.O. and order a remand or to give any directions. Thus we are of the view that the Ld. CIT(A) was not justified in giving direction to the A.O. to levy penalty under section 271AAA of the I.T. Act, 1961. We, therefore, set aside the order of the Ld. CIT(A) on this ground. Accordingly, ground of appeal No.2 of the assessee is allowed. - ITA.No.4795/Del./2017 - - - Dated:- 13-6-2022 - Shri Anil Chaturvedi, Accountant Member And Shri N.K. Choudhary, Judicial Member For the Assessee : Shri Tanpreet Singh Kohil, Advocate For the Revenue : Sh. Zahid Parvez, Sr. DR ORDER PER ANIL CHATURVEDI, A.M. This appeal by Assessee has been directed against the Order of the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year under consideration, it was not allowable and accordingly he disallowed the same. On the aforesaid amount disallowed, A.O. has levied penalty under section 271(1)(c) of the I.T. Act, 1961. 4.1. The Learned A.R. submitted that in the assessment order in respect of the addition made and on which penalty has been levied, no satisfaction has been recorded by the A.O. as to whether it is a case of concealment of income or a case of furnishing of inaccurate particulars of income. He submitted that in the absence of proper recording of satisfaction, no penalty under section 271(1)(c) of the I.T. Act is leviable. In support of his contentions, he relied on the decision of Hon ble Karnataka High Court in the case of CIT vs., Manjunatha Cotton Ginning Factory [2013] 35 taxmann.com 250 [Karnataka] and CIT vs., SSA s Emerald Meadows [2016] 76 taxmann.com 241 [Karnataka]. He submitted that the decision of Hon ble Karnataka High Court on appeal by the Department in the case CIT vs., SSA s Emerald Meadows has been confirmed by the Hon ble Supreme Court and is reported in 73 taxmann.com 248 (SC). He further submitted that the addition has been made on account of differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the powers of the Commissioner (Appeals) as contemplated under section 251 of the I.T. Act, 1961. He, referring to the provisions of Section 251(1)(b) the CIT(A) in an appeal against the order imposing a penalty can either confirm the penalty or he may cancel the penalty or he may vary it either to enhance the penalty or reduce the penalty. He submitted that the impugned order before Ld. CIT(A) was against the order imposing penalty under section 271(1)(c) of the I.T. Act. He submitted that as per the provisions of Section 251(1)(b) it is not open to the Ld. CIT(A) to set aside the order of the A.O. and order a remand or to give any direction. He pointing to page-33 of CIT(A) order submitted that in the present case the Ld. CIT(A) has directed the A.O. to issue notice under section 271AAA of the I.T. Act, 1961 in respect of addition of Rs.44,50,000/- on account of undisclosed cash and to consider (in the course of penalty proceedings) if the condition of levy of penalty under section 271AAA are applicable and that A.O. was directed to arrive at his own independent finding regarding the levy or dropping of penalty under section 271AAA of the I.T. Act, 1961. He, therefore, submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition of Rs.26,080/- on account of deferred revenue expenditure, no satisfaction has been recorded by the A.O. as to whether it is a case of concealment of particulars of income or furnishing of inaccurate particulars of income. We find force in the arguments of the Learned A.R. and the decisions relied on by the Learned A.R. On this score itself similar view is taken by Hon ble Karnataka High Court in the case of CIT vs. M/s. SSAs Emerald Meadows 73 taxmann.com 241. This decision is confirmed by the Hon ble Supreme Court reported in 73 taxmann.com 248 (SC). In this view of the matter, the orders of the authorities below are set aside and penalty is cancelled. Ground of appeal No.1 of the assessee is allowed. 8. As far as the issue raised in ground No.2 i.e., with respect to direction of Ld. CIT(A) to A.O. for levy of penalty under section 271AAA is concerned, we find that Ld. CIT(A) vide para 4.1.3 of the order had deleted the penalty levied under section 271(1)(c) of the I.T. Act by holding that A.O. had erroneously applied the provisions of Section 271(1)(c) of the I.T. Act. He however directed the A.O. to initiate penalty proceedings under section 271AAA of the I.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate authority can pass any order as he thinks fit, in the appeals against orders imposing penalties, the power of the first appellate authority is circumscribed or confined within limits. He can only confirm or cancel such order or vary it either enhancing it or reducing it. It is not open to the first appellate authority to set aside the order of the ITO and order a remit or to give any direction as done in the instant case. This section is similar to section 31(3)(f) of the Indian Income-tax Act, 1922. Construing section 31(3)(f), a Bench of the Allahabad High Court in CIT v. Rameshwardas Ram Narain [1977] 107 ITR 710 held that there is no power in the first appellate authority to give a direction to take fresh action in accordance with law. In other words the first appellate authority in the cases governed by section 31(3)(i) corresponding to section 251(1)(b) of the Income-tax Act cannot set aside the order appealed against and order a remit or give further directions in that behalf. In this perspective the Tribunal was justified in cancelling the order passed by the AAC and in the result cancelling the penalty levied The decision of the Tribunal is not open to objection. We, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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