Successful Appeal Against Income Tax Penalty for AY 2013-14 Due to Justified Delay

The appeal challenging the penalty under section 271(1)(c) of the Income Tax Act for the assessment year 2013-14 was successful. The Tribunal found that the delay in filing the appeal was justified due to non-receipt of the penalty order and the subsequent deletion of additions/disallowances made in the quantum assessment. The Tribunal set aside the dismissal of the appeal and concluded that the penalty could not be upheld. Therefore, the penalty was deemed not to survive, and the appeal of the assessee was allowed.

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Issues involved:
The appeal challenges the penalty levied under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2013-14, contending that the penalty should not stand in light of previous favorable decisions.

Summary of Judgment:

Issue 1 - Delay in filing appeal and service of penalty order:
The assessee argued that there was no delay in filing the appeal before the CIT(A) as the penalty order was not served on them until May 13, 2021. The assessee claimed they were unaware of the penalty order due to non-receipt of the notice through email. The Tribunal found merit in the submission that the delay was justified, especially considering the successful outcome in the quantum assessment.

Issue 2 - Justification for penalty imposition:
The assessing officer imposed the penalty under Explanation-1 to Section 271(1)(c) for deemed concealment of income. However, during the pendency of the quantum assessment appeal, the penalty proceedings were initiated without considering the pending appeal status. The Tribunal noted that the penalty would not stand as the additions/disallowances made in the quantum assessment were later deleted.

Issue 3 - Service of penalty order and condonation of delay:
The CIT(A) dismissed the appeal, asserting that the penalty order was served through the ITBA portal as per due procedure. However, the Tribunal observed that there was no evidence of the penalty order being sent to the registered email of the assessee. The Tribunal set aside the dismissal of the application for condonation of delay, emphasizing the lack of justification for rejecting the delay.

Conclusion:
Given the successful appeal outcome in the quantum assessment, where the additions were deleted, the Tribunal concluded that the penalty under section 271(1)(c) could not be upheld. Therefore, the appeal of the assessee was allowed, and the penalty was deemed not to survive.

Separate Judgment by Judges:
The order was pronounced by the Judicial Member, Shri Pawan Singh, on August 14, 2023.

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