The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has recently held that the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961 shall not survive if the matters are restored to the assessing officer for passing rectification order.
The assessee filed the above appeal against the order of NFAC relating to assessment year 2009-10.
Assessee submitted that the Tribunal has restored the matter for making necessary rectification to the file of AO. Therefore the penalty levied under Section 271(1)(c) of the Income Tax Act did not survive.
Further assessments submitted that the issue of imposition of penalty under Section 271(1)(c) Income Tax Act depends upon the rectification order to be passed by the AO as per direction of the Tribunal order dated 25.05.2022.
Sanjay Kumar Yadav, counsel for the revenue agreed that the Tribunal had restored the matter to the file of AO for passing a rectification order.
However, he submitted that the Assessing Officer is very well entitled to take appropriate action, if it is found necessary, for imposing penalty under Section 271(1)(c) of Income Tax Act on the assessee as per outcome of the rectification order.
It was observed by the tribunal that in the first appellate order the assessee challenged the confirmation of addition on account of long-term capital gain.
While considering the penalty order AO imposed a penalty on the same issue of addition on account of long term capital gain on sale of capital assets.
Therefore the two-member bench of Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) determined that “Since the quantum appeal has been restored to the file of AO for passing rectification order therefore the penalty imposed on the assessee under Section 271(1)(c) of the Income Tax Act on the strength of earlier assessment order dated did not survive.” Further, the bench pointed out that “if it is found necessary as per the outcome of rectification order passed in pursuant to the Tribunal order dated 25.05.2022, Assessing Officer would be entitled for initiation of penalty and passing appropriate order under Section 271(1)(c) of the Income Tax Act”.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
