The Income Tax Appellate Tribunal (ITAT), Cuttack Bench, has recently, in an appeal filed before it, held that penalty cannot be levied u/s 271(1)(c) of income tax act, when sustainability of addition is debatable.
The aforesaid observation was made by the Cuttack ITAT, when an appeal was filed before it, by the assessee, as against the order of the CIT, Sambalpur, dated 19.3.2021, levying penalty u/s.271(1)(c) of the Income Tax Act in Appeal No. ITBA/PNL/F/271(1)(c)/2020-21/1031610004(1), for the assessment year 2014-15.
With Shri B.R.Panda, , the AR for the assessee having submitted that the order u/s.263, had been passed by the Pr. CIT, Sambalpur, wherein, the issue of cash deposits of Rs.62,10,386/- had been directed to be added, the AR further added in his submission that, it is consequent to the order passed u/s.263 that penalty proceedings u/s.271(1)(c) of the Income Tax Act, had been initiated against the assessee.
He added that the assessee had responded to the same, but that the response of the assessee was not considered satisfactory, based on which the Pr. CIT had, thus, levied penalty u/s.271(1)(c) for concealment of particulars of income. It was the submission that the order passed u/s.263 was the subject matter of appeal before the Tribunal and that the Tribunal vide its order in ITA No.163/CTK/2019 dated 14.10.2020, had confirmed the order u/s.263 of the Income Tax Act.
It was again the submission of the AR of the assessee, that against the said order of the Tribunal, had the assessee filed an appeal before the Jurisdictional High court of Orissa and that the Jurisdictional High Court of Orissa was pleased to admit the appeal of the assessee in ITA No.8 of 2021 vide order dated 30.1.2023.
The AR having further submitted that as the appeal had been admitted on substantial question of law, the sustainability of the addition itself has thus become debatable and that consequently, the penalty u/s.271(1)(c) cannot be levied, he placed reliance upon a number of decisions such as that of the Karanataka High Court in the case of CIT vs Dr. Harsha N Billiangady, and that of the Supreme Court in the case of Bansi Dhar and Son, wherein, it has been held that once the order is the subject matter of appeal before the High Court and the same has been admitted, the Assessing Officer is to wait to the order before proceeding further.Thus, it was the AR’s submission that, as the appeal has already been admitted by the Jurisdictional High Court of Orissa, the penalty as levied ,may kindly be cancelled.
However, on the other hand, Shri M.K.Gautam, the CIT DR, on behalf of the Revenue, vehemently supported the order of the Pr. CIT, with his submission that the fact that the Tribunal has upheld the order of the Pr. CIT u/s.263 clearly shows that the assessee has concealed its particulars of income, and hence that the penalty levied u/s.271(1)(c) for concealment of particulars of its income by the assessee , is thus, liable to be upheld.
Hearing the opposing contentions of either sides and thereby perusing the materials available on record, the ITAT Bench consisting of Arun Khodpia, the Accountant Member, along with George Mathan, the judicial member held:
“We have considered the rival submissions. As it is noticed that the appeal against the order of the Tribunal upholding the order u/s.263 representing the quantum addition has already been admitted by the Hon’ble Jurisdictional High Court of Orissa referred , respectfully following the principles laid down by the Hon’ble Karanataka High Court in the case of Harsha N Billiangady , the penalty as levied by the Pr. CIT stands quashed. In the result, appeal of the assessee stands allowed”.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
