ITAT Mumbai Flags Factual Errors in Penalty Appeal

The Income Tax Appellate Tribunal Mumbai “C” Bench has set aside a penalty-related appellate order in the case of Oopal Diamond for Assessment Year 2009–10, after finding that the first appellate authority relied on incorrect and irrelevant facts. The assessee had challenged the order of the National Faceless Appeal Centre which had upheld a penalty imposed under Section 271(1)(c) of the Income Tax Act for alleged concealment of income. During the hearing, the assessee pointed out that the Commissioner (Appeals) referred to assessment orders and proceedings from entirely different years, including an order dated 14 December 2019, whereas the assessment relevant to the present case was passed on 27 March 2015. The Tribunal observed that even the reasoning used to uphold the penalty was based on mismatched facts and unrelated quantum additions.

Matter Sent Back for Fresh Adjudication

Taking note of these serious factual inconsistencies, the Bench held that the penalty appeal had not been adjudicated on the correct record. It therefore restored the matter to the file of the Commissioner (Appeals) for de novo consideration in accordance with the proper assessment year and facts of the case. The Tribunal also directed that the assessee must be given a reasonable opportunity of being heard before any fresh order is passed. As a result, the appeal was allowed for statistical purposes, reopening the penalty dispute for a fresh and legally sound examination.