Mechanism for quantification of penalty under the Income Tax Act

IN THE INCOME TAX APPELLATE TRIBUNAL
“A” BENCH, AHMEDABAD
[Conducted Through Virtual Court]
BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT And
SHRI WASEEM AHMED, ACCOUNTANT MEMBER

ITA.No.59/Ahd/2019

Asstt. Year: 2013-14

Salim Valimohamand Meman
4, Sahajanand Society
Danilimda
Ahmedabad.
PAN : ACBPM 7325 B

vs

ITO, Ward-6(1)(5)
Ahmedabad.

Assessee by : Shri Varis V. Isani, AR
Revenue by : Shri S.S. Shukla, Sr.DR

Date of Hearing : 10/09/2021

Date of Pronouncement: 15/09/2021

O R D E R

Only grievance of the assessee is that the ld.CIT(A) has erred in confirming penalty of Rs.19,19,029/- imposed by the AO under section 271(1)(c) of the Income Tax Act, 1961.

2.This quantum addition was confirmed by the ld.CIT(A) on account of non-appearance before the ld.first appellate authority. Thereafter, the ld.AO initiated penalty proceedings under section 271(1)(c) by issuance of notice under section 274 of the Act. For want of satisfactory explanation from the assessee in the penalty proceedings, the ld.AO imposed penalty of Rs.19,19,029/- being 100 of the amount of tax sought to be evaded. Action of the ld.AO also confirmed by the ld.CIT(A). Aggrieved by action of the ld.Revenue authorities in imposing penalty under section 271(1)(c) of the Act, the assessee is now before the Tribunal.

3.The ld.counsel for the assessee at the very outset submitted that addition made by the ld.AO and confirmed by the ld.CIT(A) was challenged before the ITAT vide ITA No.2326/Ahd/2018 and the ITAT vide order dated 26.7.2019 has set aside exparte order of the ld.CIT(A) on quantum appeal, and remitted the issue back to his file for readjudication. Thus, the determination of income for the purpose of taxation is yet to be finalized. In other words, whether the additions on account of unexplained cash deposits in bank, unexplained expenditure and disallowance of deductions claimed under Chapter VIA require to be made in the hands of the assessee or not, is subjudiced before the ld. first appellate authority, and therefore, levy penalty under section 271(1)(c) is not justifiable, and the orders of the Revenue authorities in this behalf are to be set aside back to the file of the ld.CIT(A) for a relook based on the outcome of the additions pending before him.

4.In the result, appeal of the assessee is allowed for statistical purpose.
Order pronounced in the Court on 15th September, 2021 at Ahmedabad.

Please find attached the enclosed file for the full judgement