The present appeal was filed by the assessee, Shri Atul Kishore Trivedi, against the order dated 05.11.2024 passed by the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC), Delhi, for the Assessment Year 2014-15, whereby the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961, amounting to ₹12,61,425, was confirmed.

The appeal before the Tribunal was delayed by 78 days. The assessee filed an application seeking condonation of delay, explaining that the documents relating to the assessment proceedings were misplaced by the counsel handling the matter. An affidavit in support of the explanation was also filed. After considering the facts and circumstances and the affidavit placed on record, the Tribunal held that the delay was satisfactorily explained. Relying upon the judgment of the Hon’ble Supreme Court in Collector of Land Acquisition vs Mst. Katiji, the delay was condoned and the appeal was admitted for adjudication.

On merits, it was contended on behalf of the assessee that the penalty levied under section 271(1)(c) was unsustainable in law since the very reassessment order passed under section 147 read with sections 144 and 144B had already been set aside by the appellate authority and the matter had been restored to the file of the Assessing Officer for fresh assessment. It was argued that once the quantum assessment itself does not survive, the penalty proceedings based thereon cannot be sustained.

The learned Departmental Representative supported the orders of the lower authorities.

After considering the rival submissions and examining the material available on record, the Tribunal observed that it was an undisputed fact that the quantum assessment had been set aside and remanded to the Assessing Officer for fresh consideration. In such circumstances, the penalty imposed under section 271(1)(c), being consequential to the assessment order, could not be sustained.

Accordingly, the Tribunal set aside the impugned order and restored the issue relating to the levy of penalty to the file of the Assessing Officer, to be decided afresh in accordance with law after completion of the reassessment proceedings.

As a result, the appeal filed by the assessee was partly allowed for statistical purposes.

Source Link:
https://itat.gov.in/public/files/upload/1765769148-SR9aAp-1-TO.pdf


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