RAJU VERMA,DEHRADUN V. INCOME TAX OFFICE, CENTRAL CIRCLE

ITA 73/DDN/2024

AI Insights

The case involves Raju Verma, the appellant, who contested a penalty order issued by the Learned Commissioner of Income-Tax (Appeals)-3, Noida, under Section 271(1)(c) of the Income-Tax Act, 1961, for the assessment year 2011-12. The penalty was initially imposed following a search and seizure operation and subsequent adjustments to the assessee's declared income. However, the ITAT quashed the related assessment proceedings due to lack of valid approval under Section 153D of the Act, leading to the current appeal against the penalty. The tribunal's decision to cancel the penalty was influenced by the significant alterations made to the assessment order, which removed the foundation for the penalty.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126676 (ITAT-DEHRADUN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Other Referred Cases: PCIT vs. Fortune Technocomps (P) Ltd.
• Laws Referred To: Income-Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.K. CHATERJEE
• Assessee Lawyers: K K JUNEJA
• Keywords: Set aside; Bogus purchase; Search and seizure; Initiation of penalty proceedings; Bogus; HRA; Commissioner; Purchases; Department; Affirmed; Section 132
• Section: 271(1)(c); 132

Judgement Text

" INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH “DB”: NEW DELHI BEFORE SHRI VIMAL KUMAR, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER ITA No. 73/DDN/2024 Assessment Year: 2011-12 Raju Verma, 17/1 Curzon Road, Dehradun (Uttrakhand) PIN 248 001 PAN No. ABIPV8176F Vs. Income Tax Officer, Kotdwar (Uttrakhand) (Appellant) (Respondent) O R D E R PER VIMAL KUMAR, JUDICIAL MEMBER: The appeal filed by the appellant/assessee is against penalty order dated 09.04.2024 passed by Learned Commissioner of Income-Tax(Appeals)-3, Noida (hereinafter referred as ‘Ld. CIT(A)’) under Section 271(1)(c) of the Income-Tax Act, 1961 (hereinafter referred as “the Act”) for assessment year 2011-12. 2. Brief facts of case are that a search and seizure operation under Section 132 of the Act was initiated on the business and residential premises of the assessee on 14.03.2012 at the Punjab Assessee by: Shri KK Juneja, Adv. Department by: Shri S.K. Chaterjee, CIT DR Date of Hearing: 17.04.2025 Date of pronouncement: 23.04.2025 ITA No.73/Del/2024 2 Jewellers Group of cases. The assessee furnished his return of income on 28.03.2013 declaring total income at Rs.3,29,350/-. During appellate proceedings in Appeal, Ld. CIT(A)-2, Agra, income of the assessee was enhanced. Penalty proceedings under Section 271(1)(c) of the Act were initiated vide order dated 15.11.2023. After show-cause-notice dated 14.12.2023, penalty order dated 09.04.2024 was passed by the Ld. CIT(A). 3. Being aggrieved, appellant/assessee preferred present appeal. 4. Learned Authorised Representative for assessee submitted that the Income Tax Appellate Tribunal, Dehradun Bench, New Delhi in ITA No.94/DDN/2023 vide order dated 09.04.2025 set aside quantum order and for want of valid approval u/s. 153D of the Act. Since, the entire assessment proceedings have been quashed by the Income Tax Appellate Tribunal, the penalty proceedings based on the assessment order may please be treated as no-nest and liable to be cancelled. 5. Learned departmental representative relied on impugned order. ITA No.73/Del/2024 3 6. From examination of record in the light of aforesaid rival submissions, it is crystal clear that ITAT, Dehradun Bench in ITA No.94/DDN/2023 dated 09.04.2025 had quashed the assessment proceedings. 7. Hon’ble High Court of Delhi in ITA No.313/2016 titled as “PCIT vs. Fortune Technocomps (P) Ltd. in para nos. 6 & 7 has held as under: “6. Despite the basis for issuance of the penalty notice under Section 271 (1) (c) having disappeared with the deletion by the CIT (A) of the addition made by the AO, the latter continued with the penalty proceedings and imposed the penalty as noted above. This was set aside by the CIT (A). The Revenue then went in appeal before the ITAT which by the impugned order affirmed the order of the CIT (A). Relying on the decision of the Calcutta High Court in CIT v. Ananda Bazar Patrika Pvt. Ltd. (1979) 116 ITR 416 (Cal), the ITAT held that \"once the basis for initiation of penalty proceedings was altered or modified by the first appellate authority, the Assessing Officer has no jurisdiction thereafter to proceed on the basis of the findings of the first appellate authority.\" 7. Having examined the impugned order of the ITAT and having considered the submissions of the learned counsel for the Revenue, the Court is unable to discern any legal infirmity in the analysis or conclusion reached by the ITAT. Once the assessment order of the AO in the quantum proceedings was altered by the CIT (A) in a significant way, the very basis of initiation of the penalty proceedings was rendered non-existent. The AO could not have thereafter continued the penalty proceedings on the basis of the same notice. Also, the Court concurs with the CIT (A) and the ITAT that once the finding of the AO on bogus purchases was set aside, it could not be said that there was any ITA No.73/Del/2024 4 concealment of facts or furnishing of inaccurate particulars by the Assessee that warranted the imposition of penalty under Section 271(1)(c) of the Act.” 8. In view of above material facts, circumstances and well settled principle of law, once the basis of penalty proceedings has been cancelled, the penalty proceedings are set aside. 9. In the result, the appeal filed by assessee is allowed. Order pronounced in the open court on 23/04/2025. Sd/- Sd/- (BRAJESH KUMAR SINGH) (VIMAL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 23/04/2025 Mohan Lal Copy forwarded to - 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "