The legal landscape of taxation often unfolds in intricate layers, where appeals serve as crucial mechanisms for individuals and entities to contest decisions made by tax authorities. In a recent case, the Assessee, dissatisfied with penalty orders issued by the Learned Commissioner of Income Tax (Appeals)-11, Ahmedabad, has filed appeals against separate orders pertinent to Assessment Years 2011-12 to 2015-16 under Section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as "the Act").
The lead case in question, ITA No. 307/Ahd/2018, pertains to the Assessment Year 2011-12. The Assessee has raised multifaceted grounds of appeal, primarily challenging the ex parte nature of the order passed by the Learned Commissioner and disputing the levy of penalty under Section 271(1)(c) of the Act. Additionally, the Assessee has invoked additional grounds based on new information obtained under RTI, contending that the penalty order lacks legal validity due to procedural irregularities.
The Assessee's counsel underscores the fundamental right to raise additional legal grounds during proceedings, citing precedent-setting cases that affirm this right. The Assessee asserts that the delay in presenting these additional grounds is justified by the discovery of new information regarding the nature of the assessment approval process, obtained through RTI.
The Assessing Officer (AO) and the Departmental Representative (DR) have offered counterpoints, neither contesting the admission of additional grounds nor the contention of procedural irregularities. However, the crux of the dispute lies in the validity of the penalty order, intertwined with the legality of the assessment order under Section 153C of the Act.
The assessment under Section 153C, conducted subsequent to a search under Section 132, formed the basis for the penalty imposed under Section 271(1)(c) by the AO. The Assessee argues that the assessment was invalid due to procedural lapses, particularly the lack of proper approval under Section 153D of the Act.
The appellate body meticulously evaluates the statutory framework, scrutinizing the procedural compliance mandated under Section 153D. Despite the presence of formal approval by the Joint Commissioner, critical deficiencies in the approval process come to light, indicating a lack of requisite application of mind.
Drawing from legal precedents and legislative intent, the appellate body emphasizes the necessity for the superior authorities to exercise discretion and apply thorough scrutiny before granting approval. The absence of such deliberation renders the assessment order invalid and, consequently, the penalty order unsustainable.
In light of the procedural irregularities and the subsequent annulment of the assessment order, the penalty imposed under Section 271(1)(c) cannot stand. The appellate body, therefore, upholds the Assessee's contentions, concluding that the penalty is not legally tenable.
In summary, the appeals filed by the Assessee against penalties under Section 271(1)(c) underscore the significance of procedural compliance and the pivotal role of superior authorities in ensuring the validity of assessment orders. This case serves as a testament to the intricate legal nuances governing tax proceedings and the imperative for meticulous adherence to statutory requirements.
Topic- Impact Forging Versus Deputy Commissioner of Income Tax
Court-ITAT-Rajkot
Date-08/11/2023
Team Taxonation
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