By TIOL News Service

MUMBAI, DEC 26, 2017: THE issue is - Whether penalty proceedings do not survive as soon as an appeal in quantum proceedings is admitted by the Writ Court. YES is thr verdict.

Facts of the case

The Assessee-company preferred present appeal challenging the order, whereby the ITAT had upheld the imposition of penalty proceedings u/s 271(1)(c). The basic grievance of Assessee was that, no occasion to impose penalty u/s 271(1)(c) could arise where an appeal of the Assessee in quantum proceedings had been admitted by the High Court u/s 260(A).

On appeal, the HC held that,

++ it is an undisputed position that the order of the Tribunal in quantum proceedings was challenged before this Court. This Appeal in quantum proceedings was admitted and is awaiting final disposal. On the admitted position, it is the case of Assessee that after passing of the impugned order, this Court has in the cases of Commissioner of Income-Tax v. Nayan Builders and Developers; Commissioner of Income Tax-8 v. M/s. Aditya Birla Power Co. Ltd and Commissioner of Income Tax-21 vs. M/s. Advaita Estate Development Pvt. Ltd., has dismissed the appeal of Revenue on the ground that imposition of penalty is not justified where an appeal in quantum proceedings had been admitted by this Court. An admission of appeal in quantum proceedings was evidence of the fact that the issue was debatable and arguable. In the light of the same, it is an agreed position between the parties that the impugned order passed by the Tribunal be set aside and the Appeal of Assessee be restored for fresh disposal on merits including the issue of the applicability of the decisions of this Court in Nayan Builders, M/s. Aditya Birla and Advaita Estate on sustainability of penalty in the light of facts arising in this case.

(See 2017-TIOL-2644-HC-MUM-IT)