Shreejee Aptex P.Ltd, New Delhi V. Income Tax Officer, New Delhi

ITA 708/DEL/2022

AI Insights

The case involves Shreejee Aptex P. Ltd., which appealed against the penalty imposed by the Income Tax Officer (ITO) under section 271(1)(c) for concealing income. The penalty of Rs. 75,86,150 was confirmed by the CIT(A), leading to the appeal before the ITAT. The primary contention was the ongoing quantum appeal at the CIT(A), which had not been resolved at the time of the penalty confirmation. The assessee argued that the penalty should not stand until the quantum additions are finalized. The ITAT agreed to set aside the penalty and remand the issue back to the CIT(A) to decide after the quantum appeal's outcome.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113000 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 20-12-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 18-04-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 147; 271(1)(c)

Judgement Text

1 | Page IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “G” BENCH: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA No.708/Del/2022 [Assessment Year : 2011-12] Shreejee Aptex P.Ltd., C/o-Vinay Pandey & Co., CAs, 215 A, 2 nd Floor, D-288/10, Wadhwa Complex, Near Laxmi Nagar Metro Station Gate No.1, Laxmi Nagar, New Delhi-110092. PAN-AAHCS1262N vs ITO, Ward-23(3), New Delhi. APPELLANT RESPONDENT Appellant by Shri Sachin Jain, CA Respondent by Shri Abhishek Kumar, Sr.DR Date of Hearing 21.12.2022 Date of Pronouncement 09.01.2023 ORDER PER KUL BHARAT, JM : The present appeal filed by the assessee for the assessment year 2011- 12 is directed against the order of Ld. CIT(A), National Faceless Appeal Centre (“NFAC”), Delhi dated 29.07.2021. 2. The assessee has raised following grounds of appeal:- 1. “That both the lower authorities were not justified in making and confirming the penalty order u/s 271 (1 )(c) since the same was not in accordance with the Provisions of the Income Tax Act, 1961 and is illegal on account of various grounds. 2. That both the lower authorities were not justified in making and confirming the penalty of Rs. 75,86,150/- u/s 271 (1 )(c) of the Act since no proper opportunity of hearing was given. Further, the assessee was deprived of its right to file the reply since the server/ web portal of the Department was not working. 2 | Page 3. That under the facts and circumstances of the case, NFAC was not justified in confirming the penalty since the quantum appeal is pending before the CIT (A). 4. That under the facts and circumstances of the case, the NFAC was not justified in confirming the penalty of Rs. 75,86,150/-. 5. That the appellant craves leave to add, amend, alter or withdraw any ground of appeal at the time of hearing with the permission of the Hon’ble ITAT, Delhi Bench.” 3. Facts giving rise to the present appeal are that in this case, assessment was re-opened u/s 147 of the Income Tax Act, 1961 (“the Act”). Thereby, the Assessing Officer [“AO”] assessed concealed income at Rs.2,28,37,800/-. The AO had also initiated penalty u/s 271(1)(c) of the Act. Subsequently, the AO passed an order dated 07.06.2019 u/s 271(1)(c) of the Act, thereby imposed impugned penalty of Rs.75,86,147/-. 4. Aggrieved against this, the assessee carried matter in appeal before Ld.CIT(A), who also sustained the penalty. 5. Aggrieved against the order of Ld.CIT(A), the assessee is in appeal before this Tribunal. 6. At the outset, Ld. Counsel for the assessee submitted that Ld.CIT(A) was not justified in sustaining the penalty when the appeal in quantum proceedings was still pending before Ld.CIT(A). He contended that the appeal against quantum additions has not yet been decided by the First Appellate Authority. He therefore, prayed that the impugned order may be set aside, if the assessee succeeded in quantum appeal in that event, the impugned would not have legs to stand. 3 | Page 7. On the contrary, Ld. Sr. DR opposed these submissions and submitted that Ld.CIT(A) has recorded the fact that the assessee has been thoroughly negligent and did not attend the proceedings. He contended that during the course of assessment proceedings, the assessee was provided sufficient opportunity to prove the genuineness, creditworthiness and identity of the lenders. However, the assessee chose not to attend the proceedings and file the requisite details. Even before the Ld.CIT(A), there was no representation on behalf of the assessee. Hence, authority below was justified to sustain the penalty. 8. We have heard Ld. Authorized Representatives of the parties and perused the material available on record and gone through the orders of the authorities below. Ld.CIT(A) has decided the issue by observing as under:- 4. “During the appellate proceedings notices were issued and fixing the hearing on 22.02.2021 & 23.06.2021 but no submission what’s so ever was filed. I therefore do not have any option but passed the appellate order on the basis of material available on record. 5. It is observed that during the assessment proceedings additions were made after given sufficient opportunity to the appellant. The AO has calculated the business profit on the basis of average rate of net profit shown in the preceding years. As regards fresh introduction to share capital it was the sole responsibility of the appellant to prove the entity, genuineness and creditworthiness which was not done by the appellant at any stage. Similarly huge cash in hand was shown and the source of same was never explained. These facts clearly indicate that the appellant was deliberately of violence submission or explanation and therefore it is liable for concealing the particulars its income. The therefore confirmed the penalty order passed by the AO u/s 217(1)(c) of the I.T. act levied penalty of Rs. 75,86,150/-.” 4 | Page 9. The Revenue has not rebutted the contention of the assessee that the appeal against the quantum addition is pending before Ld.CIT(A) for adjudication. Since the addition in quantum proceedings goes to the root of the levy of penalty u/s 271(1)(c) of the Act, we therefore, set aside the impugned order and restore the grounds of appeal to Ld. CIT(A) to decide it afresh after considering the outcome of the appeal of the assessee in quantum proceedings. Thus, grounds raised by the assessee are allowed for statistical purposes. 10. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 09 th January, 2023. Sd/- Sd/- (PRADIP KUMAR KEDIA) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER * Amit Kumar * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI