By JAGDISH T. PUNJABI I DEVENDRA JAIN I TEJASWINI GHAG
Chartered Accountants
Section 271(1)(c) read with section 275
– Where once addition on which penalty
has been levied is set aside to Assessing Officer for fresh consideration, it
is as good as there is no addition for levy of penalty u/s. 271(1)(c)
FACTS
The assessee company filed return of income and the
assessment was completed u/s. 143(3) making certain additions. The assessee
carried the matter in appeal before the CIT(A) wherein the partial relief was
allowed by the CIT(A). The assessee filed appeal before Tribunal for the
additions sustained by the CIT(A). The Tribunal set aside the issue to the file
of the AO with a direction to examine the entire facts of the case.
The AO had initiated penalty proceedings u/s. 271(1)(c) and
after considering the submissions of the assesse, he passed order levying penalty
u/s. 271(1)(c).
Aggrieved by the penalty order, the assessee preferred an
appeal before the Ld. CIT(A) wherein the penalty was confirmed by the CIT(A).
HELD
The Tribunal stated that once the addition on which penalty
had been levied was set aside to the AO for fresh consideration, it was as good
as there was no addition for levy of penalty u/s. 271(1)(c) of the Act.
In present case, the AO had finalised penalty proceedings
before the Tribunal had set aside the issue of additions in the quantum appeal
to the file of the AO. The case was covered under the provisions of sub section
(1A) to section 275 of the Act where it is categorically stated that in a case
where the relevant assessment or the order is the subject matter of an appeal
before the appellate authorities or High Court and an order imposing or
enhancing or reducing or cancelling penalty or dropping the proceedings for the
imposition of penalty is passed before the order of the appellate authority is
received by the Commissioner then the order imposing or enhancing or reducing
or cancelling penalty or dropping the proceedings for the imposition of penalty
may be passed on the basis of assessment as revised by giving effect to such
order of the appellate authorities.
Therefore, the Tribunal set aside the issue to the file of
the AO directing him to reconsider the issue as per the provisions of section
275(1A) of the Act.
