ITO vs. Audyogik Tantra Shikshan (ITAT Pune)

AO reprimanded for harassing the assessee by wrongly levying penalty

The AO levied penalty u/s 271(1)(c) which was deleted by the CIT(A). The AO filed an appeal before the Tribunal. The assessee filed a CO in which it was inter alia argued that in the assessment order which had been supplied to the assessee, there was no direction for initiating penalty though in the assessment order filed by the department with the memo of the appeal, there was a reference to the issue of notice u/s 271(1)(c). The assessee demanded costs u/s 254(2B). HELD by the Tribunal upholding the assessee’s plea:

“… we are surprised to note that contents of assessment orders meant for the same A.Y. 2004-05 in the case of the same assessee, are different. Both the assessment orders are stated to have been passed by the A.O on 25.11.2006 …… The copy of assessment order filed by the assessee with its cross objection is a certified true copy by the ITO and further certified as true copy by the assessee. The above stated facts and circumstances suggest that the A.O has tried to cover up its lapses in not mentioning his satisfaction that it is a fit case for levy of penalty u/s. 271(1)(c) and recording of the initiation of penalty proceedings in the assessment order, which cannot in any way be appreciated. Under these circumstances, there is no reason to doubt the allegation of the assessee that the A.O was adamant to harass the assessee. Thus, in our view, it is a fit case of awarding cost u/s. 254(2B) of the Act, but at the same time, we appreciate the approach of the assessee as discussed hereinabove that they are not interested in the awarding of the cost but their whole purpose in making such request in awarding the cost is only to bring the high handedness of the A.O against the assessee to the notice of the Tribunal. Under the circumstances, we though restrain ourselves from awarding the cost as wished by the assessee, but at the same time, we are inclined to record over here before parting with the order that A.O should have confined himself in making just and proper assessment only, as per the provisions of the law and harassment of the assessee which is not permitted under the Statute should have been avoided at all cost.”