IT: Where assessment order itself was dismissed by High Court, consequential penalty order becomes infructuous
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[2013] 34 taxmann.com 278 (Rajasthan)
HIGH COURT OF RAJASTHAN
Commissioner of Income-tax, Kota
v.
Krishi Upaj Mandi Samiti*
AJAY RASTOGI AND ARUN BHANSALI, JJ.
D.B. IT APPEAL NO. 540 OF 2011
MARCH 18, 2013
Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income [Deletion of additions in quantum appeal] - In appeal filed by assessee against assessment order, Commissioner (Appeals) confirmed additions made by Assessing Officer - Tribunal while setting aside order of authorities, directed Assessing Officer to make assessment afresh after affording adequate opportunity of being heard to assessee - In meanwhile, Assessing Officer imposed penalty under section 271(1)(c) on basis of additions sustained by Commissioner (Appeals) - Commissioner (Appeals) cancelled penalty - Tribunal held that there was no reason to interfere with order of Commissioner (Appeals) as very basis of levy of penalty i.e. assessment order making assessment treating assessee as trust was not eligible for exemption from income as a trust had been ultimately set aside by Tribunal with direction to treat assessee as trust and make assessment afresh in accordance with law - Appeal preferred by revenue against order of assessment came to be dismissed by High Court - Whether, therefore, appeal preferred by revenue against penalty order on account of changed circumstances deserved to be dismissed as having become infructuous - Held, yes [Para 4] [In favour of assessee]
CASES REFERRED TO
CIT v. Krishi Upaj Mandi Samiti [2011] 331 ITR 174/199 Taxman 124 (Mag.)/9 taxmann.com 117 (Raj.) (para 1).
Mrs. Parinitoo Jain for the Appellant.
ORDER
1. It has been informed to this court that the appeal preferred by the Revenue against the order of assessment being D.B.Income Tax Appeal No. 167/2010 came to be dismissed by this Court vide judgment dt. 18th August, 2010 in CIT v. Krishi Upaj Mandi Samiti [2011] 331 ITR 174//199 Taxman 124 (Mag.)/9 taxmann.com 117 (Raj.).
2. As it reveals from the record, the assessment order was initially passed by the assessing authority on 11th December, 2006 and that was challenged in appeal before the CIT (Appeals) which was partly allowed and while confirming the additions made by the Assessing Officer, the CIT (Appeals) directed to allow depreciation on various assets. The assessee further approached the ITAT against the order of CIT (Appeals) and the IT AT while setting aside the order of the authorities directed the Assessing Officer to make assessment afresh after affording adequate opportunity of being heard to the assessee. Against the order of ITAT dt.30th April, 2008, the department preferred appeals U/s.260A of the Act and such appeals came to be dismissed by the Division Bench of this court vide judgment dt.l8th August, 2010 in Krishi Upaj Mandi Samiti's case (supra).
3. It further reveals that in the meanwhile, the Assessing Officer in accordance with the provisions of the Act considered the order of CIT (Appeals) and proceeded with penalty proceedings U/s.271(l)(c) and imposed penalty on the basis of additions sustained by CIT (Appeals) vide order dt.26th February, 2007. However, an appeal came to be preferred by the assessee before the CIT (Appeals) who vide order dt.l8th November, 2008 cancelled the penalty observing that the assessment which formed the basis of the penalty order has been set aside by the ITAT with the direction to make assessment afresh and there was no justification for levy of penalty. However, against the order of CIT (Appeals), the revenue preferred appeal before the ITAT that came to be rejected vide order dt.20th March, 2009 observing that there is no reason to interfere with the first appellate order on the issue as the very basis of levy of penalty i.e. the assessment order making assessment treating the assessee as Trust is not eligible for exemption from income as a Trust has been ultimately set aside by ITAT with direction to treat the assessee as Trust and make assessment afresh in accordance with law.
4. In view of the judgment of this court dt.l8th August, 2010 since the appeals preferred by the revenue have been dismissed, the present appeal preferred against the order of ITAT on account of these changed circumstances, does not hold any merit. However, the ITAT itself while dismissing the appeal vide order dt.20th March, 2009 granted liberty to the department to initiate fresh penalty proceedings U/s.271(l)(c) of the Act in case they succeed in appeal before the High Court but that appeal has been dismissed by this court, therefore, the present appeal deserves to be dismissed as having become infructuous.
5. Consequently, in the light of above changed circumstances, the present appeal preferred by the department stands dismissed as having become infructuous.
LATARegards
Prarthana Jalan
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