2021 (9) TMI 1265 - AT - Income Tax

Rectification of mistake u/s 154 - levying penalty u/s 271(1)(c) - bogus export to Russia has been made for conversion of black money through Hawala channel and the assessee claimed deduction u/s 80HHC - HELD THAT - There is no error pointed out by the assessee before the ld AO and the ld CIT(A) based on which it could have been said that there is a mistake apparent from the record in absence the order u/s 271 (1) (C) of the Act by the ld AO - AO is also justified in passing the order u/s 271 (1) (C) of the Act as the appeal of the assessee was dismissed by learned CIT A and further merely because some rectification is pending before the ld CIT(A) against quantum proceedings it cannot become a mistake apparent from the record in the penalty proceedings. Of course, if there is error in the order of the ld CIT(A) in quantum proceedings and if the addition is deleted, naturally the penalty could be deleted thereafter. In fact this is the appeal against the order passed u/s 154 of the act in penalty order levying penalty u/s 271 (1) (C) of the and not the appeal against the penalty order passed u/s 271(1)(c) of the Act. Even the ground of appeal raised by the assessee do not support the respective orders attached with the appeal

Summary

Issues:
Appeal against order of CIT (A) dismissing appeal against order passed u/s 154 by AO.

Analysis:
The appeal was filed against the order of the ld CIT (A)-Meerut dated 28.03.2016, dismissing the appeal against the order passed u/s 154 of the Act by the ld AO. The original assessment order u/s 271(1)(c) was passed by the ld AO on 21.03.2014, imposing a penalty of ?70 lacs. The assessee made an application u/s 154 on 12.04.2014, stating that the penalty proceedings should be kept in abeyance as quantum appeal was pending before the ld CIT(A). The ld AO rejected the application on 07.07.2014, stating that there was no mistake apparent from the record in the penalty order. The appeal before ITAT challenged this order. The assessee raised various grounds of appeal, including errors in the order of the ld CIT (A) and the imposition of penalty against the law. However, the assessee failed to appear at multiple scheduled hearings, leading to the case being decided based on available information.

The ld DR supported the lower authorities' orders, arguing that the assessing officer rightly rejected the application u/s 154, and the CIT(A) made a correct decision. It was emphasized that the pendency of the quantum appeal did not prevent the assessing officer from passing the penalty order. The ITAT considered the contentions and reviewed the orders of the lower authorities. The penalty was initiated due to bogus exports and false claims under section 80HHC. The ITAT found that the ld AO had considered all relevant facts before levying the penalty, and there was no apparent error that could be rectified under section 154. The ITAT concluded that the appeal was against the order passed u/s 154 in the penalty proceedings, not against the penalty order itself. As there was no identified error justifying the appeal, and the assessee failed to comply with the directions of the bench, the appeal was dismissed on 28/09/2021.

In summary, the ITAT upheld the penalty order u/s 271(1)(c) imposed by the ld AO, stating that the assessing officer had not made any rectifiable errors in the penalty proceedings. The appeal challenging the order passed u/s 154 was dismissed due to the lack of merit and non-compliance by the assessee.