Revenue Contests CIT(A)’s Penalty Reduction citing HC’s Pending Appeal: ITAT clarifies AO can Revise Order if HC modifies Order [Read Order]
Considering the AO is empowered to proportionate the penalty if the higher court reduces the additional amount, the revenue’s appeal was dismissed.
![Revenue Contests CIT(A)’s Penalty Reduction citing HC’s Pending Appeal: ITAT clarifies AO can Revise Order if HC modifies Order [Read Order]](https://www.taxscan.in/wp-content/uploads/2024/12/TAT-ITAT-Ahmedabad-CITA-AO-Taxscan.jpg "Revenue Contests CIT(A)’s Penalty Reduction citing HC’s Pending Appeal: ITAT clarifies AO can Revise Order if HC modifies Order [Read Order]")
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) dismissed Revenue's appeal challenging the CIT(A)’s reduction of penalties citing pending High Court appeals. The tribunal upheld the reduction stating the AO’s authority to revise penalties if the High Court modifies the order. Sunit Sudhirbhai Chokshi, the respondent’s income tax return was scrutinized for the...
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) dismissed Revenue's appeal challenging the CIT(A)’s reduction of penalties citing pending High Court appeals. The tribunal upheld the reduction stating the AO’s authority to revise penalties if the High Court modifies the order.
Sunit Sudhirbhai Chokshi, the respondent’s income tax return was scrutinized for the Assessment Years (AY) 2017-18 and 2018-19. The Assessing Officer (AO) assessed income at Rs. 23,87,99,020 for AY 2017-18 after additions and initiated penalty proceedings under Section 271AAB(1A) of the Income Tax Act.
On appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] reduced the addition to Rs. 4,71,46,684 and confirmed a penalty of Rs. 2,80,88,610. The assessee appealed before the ITAT which reduced the addition to Rs. 30,68,140.
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The AO initially added Rs. 23,87,99,020 for AY 2018-19, which was reduced to Rs. 1,51,27,899 by the CIT(A). On appeal, the ITAT further confirmed only Rs. 4,83,533 in addition. The CIT(A) proportionate the penalty aligns with the ITAT’s reduction in addition.
Now, in this case, the revenue department appealed against the deletions of penalties citing pending appeals before the Gujarat High Court.
The two-member bench comprising Dr. B.R.R. Kumar (Vice President) and T.R. Senthil Kumar (Judicial Member) referred to Section 275(1A) of the Income Tax Act, which empowers the AO to revise penalties following appellate or tribunal orders.
The tribunal held that penalties must align with revised assessments and upheld the CIT(A)’s order confirming penalties proportionate to additions confirmed by the ITAT.
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The tribunal explained that the AO can adjust the penalty if the Gujarat High Court makes any changes in the pending appeal against the ITAT order. With this, the appeal of the revenue was dismissed confirming that the CIT(A) had correctly applied legal provisions.
To Read the full text of the Order CLICK HERE
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