Appeal granted, penalty under Income Tax Act canceled due to omitted provision

The Tribunal allowed the appeal, canceling the penalty imposed under section 271BA of the Income Tax Act. The penalty was deemed unsustainable due to the omission of clause (i) of Section 92BA by the Finance Act, 2017, indicating that actions taken under the omitted provision are invalid. The judgment emphasized that penalties imposed under such provisions are not legally enforceable.

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Issues:
- Appeal against penalty imposed under section 271BA of the Income Tax Act, 1961 without providing a reasonable opportunity to the appellant.
- Late filing of audit report in prescribed Form No.3CEB leading to penalty proceedings.
- Omission of clause (i) of Section 92BA by the Finance Act, 2017 and its impact on penalty imposition.

Issue 1: Appeal against Penalty Imposed Under Section 271BA:
The appellant challenged the penalty imposed under section 271BA of the Income Tax Act, 1961, alleging that the Assessing Officer (AO) initiated the penalty proceedings without providing a reasonable opportunity. The appellant contended that the penalty order was passed without exercising discretion and despite the omission of the specified domestic transaction provision from the statute by the Finance Act, 2017. The appellant argued that the penalty upheld by the CIT(A) was unsustainable and impermissible under law.

Issue 2: Late Filing of Audit Report Leading to Penalty Proceedings:
The case involved the late filing of the audit report in prescribed Form No.3CEB by the appellant, which resulted in penalty proceedings under section 271BA of the Act. The AO initiated penalty proceedings against the appellant for failure to furnish the report within the stipulated time frame. Despite the appellant's submission that the delay was due to technical reasons and not malafide intent, the penalty was imposed by the AO and upheld by the CIT(A).

Issue 3: Omission of Clause (i) of Section 92BA and Its Impact on Penalty Imposition:
The significant aspect of the judgment revolved around the omission of clause (i) of Section 92BA by the Finance Act, 2017, effective from 01.04.2017. The Tribunal analyzed the legal implications of this omission on penalty imposition under section 271BA. The Tribunal observed that once a provision is omitted from the statute, it is deemed to have never existed unless there is a saving clause to indicate otherwise. Relying on relevant case laws and judicial pronouncements, the Tribunal concluded that the penalty imposed on the appellant for failure to furnish the report in prescribed Form No.3CEB, which was linked to the omitted clause (i) of Section 92BA, was not sustainable in law.

Conclusion:
The Tribunal allowed the appeal of the assessee and canceled the penalty imposed under section 271BA of the Income Tax Act. The Tribunal emphasized that the imposition of the penalty did not survive due to the omission of clause (i) of Section 92BA by the Finance Act, 2017. The judgment highlighted the legal principle that once a provision is omitted from the statute, actions taken under that provision are deemed invalid. Therefore, the penalty imposed on the appellant was deemed unsustainable in light of the statutory amendment.

This comprehensive analysis of the legal judgment provides a detailed overview of the issues involved and the Tribunal's decision on each aspect of the case.

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