Narender Jindal vs ITO Ward-63(3), New Delhi – Penalty Proceedings – ITA 6340/DEL/2019

Case Analysis: Narender Jindal vs ITO Ward-63(3), New Delhi – ITA 6340/DEL/2019

Case Number: ITA 6340/DEL/2019

Appellant: Narender Jindal, Delhi

Respondent: ITO Ward-63(3), New Delhi

Assessment Year: 2007-08

Order Type: Final Tribunal Order

Date of Order: 30th November 2022

Pronounced on: 30th November 2022

Case Filed On: 29th July 2019

Background of the Case

The case of Narender Jindal vs ITO Ward-63(3), New Delhi pertains to the assessment year 2007-08. The appellant, Narender Jindal, filed an appeal before the Income Tax Appellate Tribunal (ITAT) against the order issued by the Commissioner of Income Tax (Appeals) – 20, New Delhi, dated 25th February 2019. The appellant sought relief from the imposition of penalty by the revenue authorities, which was contested based on the quantum addition made during the assessment proceedings.

Why the Case Was Filed

Narender Jindal filed this appeal to challenge the penalty levied by the Income Tax Officer, Ward-63(3), New Delhi, for the assessment year 2007-08. The penalty was imposed following the quantum addition made by the Assessing Officer (AO) during the assessment proceedings. The appellant argued that the penalty was unjustified as the quantum addition itself was under dispute and subject to reassessment.

This appeal was crucial for the appellant as it contested the validity of the penalty proceedings, which were initiated based on the disputed quantum addition. By filing this appeal, the appellant aimed to seek relief from the penalty imposed and to ensure that the assessment process was conducted fairly and in accordance with the law.

Tribunal Proceedings

The appeal was heard by the Delhi Bench ‘E’ of the Income Tax Appellate Tribunal (ITAT), with the bench comprising Dr. B. R. R. Kumar, Accountant Member, and Sh. Yogesh Kumar US, Judicial Member. The hearing took place on 28th November 2022, and the case was heard through virtual proceedings due to the ongoing pandemic restrictions.

During the hearing, the appellant was represented by Sh. Sanjay Kumar Jain, Accountant, while the revenue was represented by Sh. Amit Shukla, Senior Departmental Representative (DR).

The tribunal was informed that the quantum addition, which formed the basis for the penalty proceedings, had been restored back to the file of the Assessing Officer (AO) by the order of the tribunal in ITA No. 2385/Del/2019 dated 17th March 2021. The tribunal had directed the AO to reassess the quantum addition after granting an opportunity to the appellant to substantiate his case.

Tribunal’s Decision

The tribunal acknowledged that since the quantum addition was under reassessment, the penalty proceedings initiated by the revenue could not be sustained at this juncture. The tribunal held that the penalty levied by the revenue did not hold, given that the foundation of the penalty—i.e., the quantum addition—was yet to be finalized.

As a result, the tribunal allowed the appeal of Narender Jindal for statistical purposes. The tribunal further noted that the Assessing Officer would be at liberty to initiate penalty proceedings de novo (afresh) after the finalization of the reassessment process as per the provisions of the Income Tax Act, 1961.

Final Judgment

In conclusion, the tribunal dismissed the penalty proceedings initiated against Narender Jindal as unsustainable, given that the quantum addition was still under reassessment. The tribunal’s order provided the appellant with relief from the immediate imposition of penalties, while also allowing the revenue authorities the option to reinitiate penalty proceedings after the reassessment was concluded.

The tribunal’s decision was pronounced in the open court on 30th November 2022, immediately following the conclusion of the virtual hearing. The order was signed by both the Judicial Member, Sh. Yogesh Kumar US, and the Accountant Member, Dr. B. R. R. Kumar, reflecting the fair and just handling of the case by the ITAT.

Significance of the Case

This case highlights the importance of the reassessment process in tax litigation. It underscores the principle that penalty proceedings should not be sustained when the underlying quantum addition is under dispute and subject to reassessment. The tribunal’s decision in this case serves as a precedent for other similar cases where penalties are imposed based on disputed quantum additions.

Furthermore, the tribunal’s decision reaffirms the taxpayer’s right to a fair assessment process and ensures that penalties are not imposed prematurely or unjustly. It also emphasizes the need for tax authorities to follow due process and to allow taxpayers the opportunity to substantiate their cases before penalties are levied.

Overall, this case is a significant example of the checks and balances within the tax litigation system, ensuring that taxpayers are treated fairly and that penalties are only imposed when fully justified.

Narender Jindal vs ITO Ward-63(3), New Delhi – Penalty Proceedings – ITA 6340/DEL/2019