GUNASEKARAPANDIYAN PRABHAKAR, UTHANGIRI V. ITO, WRD-1, , KRISHNAGIRI

ITA 24/CHNY/2023

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The case involves Mr. Gunasekarapandiyan Prabhakar, the appellant, who contested a penalty imposed under Section 271AAC(1) of the Income Tax Act, 1961, by the Income Tax Officer, Ward-I, Krishnagiri. The penalty was levied following the appellant's failure to explain the source of cash deposits made in demonetized currency during the period from November 9, 2016, to December 30, 2016, relevant to the assessment year 2017-18. The appellant's initial challenge to the penalty was dismissed by the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, leading to the current appeal before the ITAT. The ITAT's decision to remand the penalty for re-evaluation was influenced by the ongoing de novo assessment of the appellant's quantum appeal, which could potentially alter the basis for the penalty.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127911 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 21-06-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 09-01-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice

Judgement Text

आयकर अपील सं./ITA No.24/Chny/2023 िनधा रण वष /Assessment Year: 2017-18 Mr.Gunasekarapandiyan Prabhakar, No.194, Christ Campus, Krishnagiri Main Road, Gollapatti, Venkadathampatti Post, Uthangarai-635 207. v. The Income Tax Officer, Ward-I, Krishnagiri. [PAN: BRMPP 9427 L] (अपीलाथ /Appellant) ( थ /Respondent) अपीलाथ की ओर से/ Appellant by : Mr.N.Arjun Raj, CA थ की ओर से /Respondent by : Mr.P. Sajit Kumar, JCIT सुनवाई की तारीख/Date of Hearing : 22.06.2023 घोषणा की तारीख /Date of Pronouncement : 23.06.2023 आदेश / O R D E R PER ARUN KHODPIA, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), Income Tax Department, National Faceless Appeal Centre (NFAC), Delhi, dated 21.12.2022, and pertains to assessment year 2017-18. 2. The assessee has raised the following grounds of appeal: 1. The order of the NFAC dated 21.12.2022 vide DIN & Order No. ITBA/NFAC/S/250/2022- 23/1048147060(l) for the above assessment year is contrary to law, facts, and in the circumstances of the case. 2. The NFAC erred in sustaining the levy of penalty under Section 271AAC(1) of the Act amounting to Rs. l,21,489/-without assigning proper reasons and justification. आयकर अपीलीय अिधकरण, ’सी’ !ायपीठ, चे$ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI ी वी. दुगा राव, ाियक सद , एवं *ी अ ण खोडिपया, लेखा सद+ के सम BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER ITA No.24/Chny/2023 :: 2 :: 3. The NFAC failed to appreciate that having established the source and nature of investment made, the treating the said investment as unexplained investment and consequentially levying penalty under Section 271AAC(1) of the Act was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 4. The NFAC failed to appreciate that provisions of Section 271AAC(1) of the Act were not automatic and the disallowance made in the ex-parte assessment order made has not attained finality and the same is pending for adjudication in the jurisdictional Bench of Income Tax Appellate Tribunal in ITA No. 941/2022. 5. The NFAC failed to appreciate that mere rejection of explanation for the source of the investment would not attract the provisions of Section 271AAC(1) of the Act, thereby vitiating the related findings in the impugned order. 6. The NFAC failed to appreciate that in any event the plain reading of the provisions of Section 271AAC of the Act provides for the discretion for the Assessing Officer to impose the penalty and further ought to have appreciated that the mechanical approach of the Assessing Officer in imposing the penalty under consideration was not considered while passing the impugned order. 7. The NFAC failed to appreciate that there was no proper opportunity before completing the assessment as well as before passing the impugned order and ought to have appreciated that any order passed in violation of principles of natural justice would be nullity in law. 8. The Appellant craves leave to file additional grounds/arguments at the time of hearing. 3. The brief facts of the case are that the assessee is an individual made cash deposits in Specified Bank Notes (in short “SBN") [demonetized currency] in its bank account during the period from 09.11.2016 to 30.12.2016 relevant to AY 2017-18. The assessee had not filed any return of income as prescribed u/s.139 of the Income Tax Act, 1961 (in short “the Act"). Assessee’s case was taken up for assessment and assessment order was passed u/s.144 of the Act, on 31.10.2019. Ld.AO has completed assessment making an addition of Rs.15,72,673/- u/s.69 of the Act. 4. Aggrieved by the order of Ld.AO, the assessee challenged the matter before the Ld.CIT(A), NFAC, but could not succeed. The appeal of the assessee was dismissed. To challenge observation of the Ld.CIT(A), the assessee filed an appeal before the ITAT in ITA No.941/Chny/2022. The quantum appeal of the assessee was decided by the ITAT on 20.02.2023, ITA No.24/Chny/2023 :: 3 :: wherein, the issues raised by the assessee were restored back to the file of Ld.AO for de novo adjudication. The present appeal is directed against the order of the Ld.CIT(A) in adjudication of appeal filed against the order u/s.271AAC(1) of the Act, for AY 2017-18 dated 26.09.2022 passed by the ITO, Ward-1, Krishnagiri. Since, the quantum appeal of the assessee for the impugned assessment year has been restored back for de novo adjudication to the file of Ld.AO and perceptibly, outcome of the AO’s order in de novo assessment will have a bearing on the penalty order. Without discussing the merits, we find it suitable to restore the present appeal directed against the penalty order in the case of the assessee to the file of Ld.AO to adjudicate afresh in terms of his observations under the fresh adjudication of quantum assessment. We therefore remitting the matter back to the file of Ld.AO to adjudicate the same as per facts and law. 5. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced on the 23 rd day of June, 2023, in Chennai. Sd/- (वी. दुगा राव) (V. DURGA RAO) ाियक सद /JUDICIAL MEMBER Sd/- (अ ण खोडिपया) (ARUN KHODPIA) लेखा सद+/ACCOUNTANT MEMBER चे$ई/Chennai, िदनांक/Dated: 23 rd June, 2023. TLN आदेश की ितिलिप अ,ेिषत/Copy to: 1. अपीलाथ /Appellant 4. आयकर आयु-/CIT 2. थ /Respondent 5. िवभागीय ितिनिध/DR 3. आयकर आयु- (अपील)/CIT(A) 6. गाड फाईल/GF