If assessment order passed under Section 153A was held to be void ab initio, penalty on the additions does not survive, so was held by the Income Tax Appellate Tribunal (ITAT), Ahmedabad. The Appeal has been preferred by the revenue against the order passed by CIT in favour of the assessee, RameshbhaiJivrajbhai Desai.
A search action under Section 132 of the Income Tax Act, 1961 was carried out in the group case of Master Group in the Financial Year 2012-13. The assessee furnished return of income under Section 139 declaring total income of Rs.47,33,760/- and in response to notice issued under Section 153A the assessee hasagain filed return. Thereafter, order under Section 153A read with Section 143(3) of the Act was passed determining total income at Rs.3,60,26,185/-. During the course of assessment proceedings, the Assessing Officer(AO) initiated penalty proceedings under Section 271(1)(c) of the Act. The Assessing Officer imposed penalty of Rs.61,90,480/- in Assessment Year 2008-09 and penalty of Rs.1,61,88,780/- in Assessment Year 2009-10.Being aggrieved by the penalty order, the assessee filed appeal before the Commissioner of Income Tax (CIT) and allowed the appeal of the assessee.
The Counsel for the assessee,S.N. Divatia, submitted that the assessment order passed under Section 153A of the Act was held to be void ab initio and thus there is no addition in the Assessment Order which survives. Hence, the penalty also does not sustain.
The bench consisting ofSuchitra Kamble, Judicial Member and Waseem Ahmed, Accountant Member held that “During the hearing, the Department has filed adjournment application which is rejected as the issue involved does not sustain once the assessment itself becomes void ab initio. Thus, the decision in the quantum appeal in assessee’s case given by the Tribunal clearly set out the additions which were deleted in favour of the assessee.Thus, penalty on the said additions does not survive. Hence, the appeals filed by the Revenue are not sustainable.
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