Sangeeta Traders, CHENNAI V. DCIT, CHENNAI

ITA 1171/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5918 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 11-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Wrong claim

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , !, # $% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ./ ITA NO.1171/MDS/2017 ( )( / ASSESSMENT YEAR : 2004-05 M/S SANGEETHA TRADERS, C/O SHRI S. SRIDHAR, SH. A.S. SRIRAMAN, ADVOCATES, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI - 600 020. PAN : AAAFS 1943 G V. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE III(4), CHENNAI. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE -.+, / 0 / RESPONDENT BY : SHRI N. MADHAVAN, JCIT 1 / 2# / DATE OF HEARING : 05.10.2017 3 ) / 2# / DATE OF PRONOUNCEMENT : 31.10.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -19, CHENN AI, DATED 03.03.2017 AND PERTAINS TO ASSESSMENT YEAR 2004-05. 2 I.T.A. NO.1171/MDS/17 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME-TA X ACT, 1961 (IN SHORT 'THE ACT'). 3. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THE ASSESSING OFFICER LEVIED PENALTY UNDER SEC TION 271(1)(C) OF THE ACT IN RESPECT OF THE COMMISSION PAID BY THE AS SESSEE TO THE EXTENT OF ` 12,78,565/-. ACCORDING TO THE LD. COUNSEL, THE ASSESSMENT ORDER WAS CHALLENGED BEFORE THIS TRIBUNA L AND THIS TRIBUNAL REMITTED BACK THE MATTER TO THE FILE OF TH E ASSESSING OFFICER BY AN ORDER DATED 08.09.2014. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE ORIGINAL ASSESSMENT ORDER IN WHICH THE COMMISSION PAID BY THE ASSESSEE WAS DISALLOWED CANNOT BE A REA SON FOR LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN FAC T, THE ORDER OF THIS TRIBUNAL IS DATED 08.09.2014 AND THE PENALTY WAS LE VIED ON 28.02.2014 ITSELF. ACCORDING TO THE LD. COUNSEL, T HE CIT(APPEALS) CONFIRMED THE PENALTY ORDER OF THE ASSESSING OFFICE R WITHOUT CONSIDERING THE ORDER PASSED BY THIS TRIBUNAL. SIN CE THE ORDER PASSED BY THE ASSESSING OFFICER WAS SET ASIDE AND T HE MATTER WAS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER BY THIS TRIBUNAL IN THE QUANTUM ASSESSMENT PROCEEDING, ACCORDING TO THE LD. COUNSEL, 3 I.T.A. NO.1171/MDS/17 THE PENALTY CANNOT BE LEVIED BASED UPON THE ORDER W HICH WAS ALREADY SET ASIDE BY THIS TRIBUNAL. IN OTHER WORDS , THE ORDER OF THE ASSESSING OFFICER IS NOT IN EXISTENCE ON THE DATE O N WHICH THE CIT(APPEALS) CONFIRMED THE PENALTY ORDER OF THE ASS ESSING OFFICER. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE ORDER OF THE CIT(APPEALS) CANNOT STAND IN THE EYE OF LAW. 4. ON THE CONTRARY, SHRI N. MADHAVAN, THE LD. DEPAR TMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSING OFFICE R FOUND THAT THE ASSESSEE HAS PAID BOGUS COMMISSION TO SEVERAL CONCE RNS, THEREFORE, THE ADDITION WAS MADE DISALLOWING THE CL AIM OF THE ASSESSEE. SINCE ASSESSING OFFICER FOUND THAT THERE WAS BOGUS CLAIM MADE BY THE ASSESSEE, HE LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN THE MEANTIME, ACCORDING T O THE LD. D.R., FOR THE ASSESSMENT YEAR 2004-05, THIS TRIBUNAL SET ASID E THE ASSESSMENT ORDER AND REMITTED BACK THE MATTER TO TH E FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION ON THE BASIS OF THE MATERIAL THAT MAY BE FILED BY THE ASSESSEE. THE ASSESSING O FFICER, AFTER CONSIDERING THE MATERIAL FILED BY THE ASSESSEE, MAD E THE SAME ADDITION AS IN THE ORIGINAL ASSESSMENT. THEREFORE, ACCORDING TO THE LD. D.R., THE CONCEALMENT OF INCOME WHICH WAS FOUND BY THE 4 I.T.A. NO.1171/MDS/17 ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT ORDER CONTINUES TO EXIST. HENCE, ACCORDING TO THE LD. D.R., THE PENAL TY LEVIED BY THE ASSESSING OFFICER WAS RIGHTLY CONFIRMED BY THE CIT( APPEALS). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ORDER OF THE ASSESSMENT IN WHICH THE DISALLOWANCE W AS MADE TOWARDS PAYMENT OF COMMISSION, WAS SET ASIDE BY THI S TRIBUNAL BY AN ORDER DATED 08.09.2014. THEREFORE, THE ORDER OF THE ASSESSING OFFICER WHERE THE DISALLOWANCE WAS MADE IS NOT IN E XISTENCE AS ON DATE. THE ASSESSING OFFICER WHILE GIVING EFFECT TO THE ORDER OF THIS TRIBUNAL DATED 08.09.2014, HAS MADE THE SAME ADDITI ON. THE QUESTION ARISES FOR CONSIDERATION IS WHETHER THE PE NALTY LEVIED BY THE ASSESSING OFFICER CONSEQUENT TO THE EARLIER ORD ER WOULD CONTINUE TO EXIST WHEN THE ORDER WAS NOT IN FORCE? THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE BASE ORDER ON WHICH THE PENALTY WAS LEVIED IS NOT IN EXISTENCE, THE PENALTY LEVIED BY THE ASSESSING OFFICER CANNOT STAND IN THE EYE OF LAW. 6. IT IS OPEN TO THE ASSESSING OFFICER TO INITIATE A SEPARATE PROCEEDING FOR LEVY OF PENALTY CONSEQUENT TO THE OR DER PASSED BY THE ASSESSING OFFICER ON 05.03.2015 PROVIDED THE TI ME LIMIT FOR 5 I.T.A. NO.1171/MDS/17 INITIATING THE PENALTY PROCEEDING HAS NOT EXPIRED. SUFFICE TO SAY THAT THE IMPUGNED ORDERS OF THE ASSESSING OFFICER AND TH E CIT(APPEALS) LEVYING PENALTY ON THE ASSESSEE ON THE BASIS OF ORD ER OF ASSESSMENT, WHICH WAS SET ASIDE BY THIS TRIBUNAL, C ANNOT STAND IN THE EYE OF LAW. THEREFORE, WE ARE UNABLE TO UPHOLD THE ORDERS OF BOTH THE AUTHORITIES BELOW. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND PENALTY LEVIED BY THE ASSESSING OFFICER IS DELETED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 31 ST OCTOBER, 2017 AT CHENNAI. SD/- SD/- ( ! ) ( . . . ) (SANJAY ARORA) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 31 ST OCTOBER, 2017. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-19, CHENNAI-34 4. PRINCIPAL CIT, CENTRAL-2, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.