Penalty under section 271(1)(c) and additions under section 40(a)(ia) remanded for de novo adjudication due to lack of independent reasoning

ITAT remanded the matter to the file of CIT(A) for de novo adjudication, holding that the CIT(A) failed to apply independent mind to factual and legal issues before confirming levy of penalty u/s 271(1)(c) and additions u/s 40(a)(ia). The tribunal found the CIT(A) merely reproduced facts and submissions and did not address the appellant's grounds of appeal, and therefore allowed the appeal for statistical purposes and directed fresh decision-making by CIT(A).

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The firm, a partnership in the jewellery business, filed return for AY 2016-17 declaring total income of Rs. 5,00,140/-. The AO completed assessment u/s. 143(3) at Rs. 45,71,593/-, making additions: Rs. 40,00,000 (interest-bearing funds allegedly diverted for non-business purposes) and Rs. 71,453 u/s. 40(a)(ia) (30% of interest of Rs. 2,38,178 paid without TDS). Penalty proceedings u/s. 271(1)(c) resulted in levy of Rs. 12,58,100/-. The assessee contended mere estimate-based disallowance does not amount to furnishing inaccurate particulars, citing higher-court authority. The appellate authority confirmed the penalty without independent reasoning. The tribunal found the CIT(A) had "no independent application of mind" and had "jumped to the conclusion that the appellant furnished inaccurate particulars of income" without dealing with the appellant's grounds. The matter is therefore ordered to be "remand[ed] to the file of the CIT(A) for de novo adjudication in accordance with law after affording opportunity of hearing to the appellant." Appeal allowed for statistical purposes.

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