THE ACIT, CIRCLE-1(2), AHMEDABAD vs. THE GUJARAT STATE CO.OP.BANK LTD., AHMEDABAD

For disposal of this appeal of the Revenue, it is suffice to note a brief facts from the orders of the Revenue is that assessee is a cooperative bank. In the assessment made under section 143(3) of the Act, the ld.AO has made addition of Rs.8,70,07,191/- on account of disallowance of bad debts written off. This disallowance was confirmed by the ld.CIT(A). However, in further appeal before the Tribunal, the claim of the assessee under section 36(1)(vii) was allowed, and the addition made by the Revenue authorities was deleted. In the meanwhile, ld.AO initiated penalty proceedings under section 271(1)(c) of the Act and imposed the impugned penalty. However, in appeal before the first appellate authority, the same was deleted in pursuance of order of the Tribunal in the quantum appeal of the assessee in ITA No.1198/Ahd/2015. Somehow, did not satisfy with order of the ld.CIT(A) in cancelling the penalty. Therefore, Revenue has filed the present appeal.

Before us, at the outset, the ld.counsel for the assessee submitted in view of deletion of addition by the Tribunal, and consequent cancellation of penalty by the ld.CIT(A), the appeal of the Revenue has no merit, and therefore the same deserves to be dismissed. The ld.counsel has placed on record copy of above order of the Tribunal dated 4.12.2018. On the other hand, the ld.DR, did not dispute submission of the ld.counsel for the assessee.

We have heard both the parties and gone through order of the Tribunal passed in quantum appeal of the assessee referred above. We find that sub-clause (iii) of section 271(1)(c) provides mechanism for quantification of penalty. It contemplates that the assessee would be directed to pay a sum in addition to taxes, if any, payable by him, which shall not be less than , but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of income or furnishing of inaccurate particulars of income. In other words, the quantification of the penalty is depended upon the addition made to the income of the assessee. In the present case, the addition has been deleted by the Tribunal vide order dated 4.12.2018( supra), and based on which the ld.CIT(A) cancelled the impugned penalty, and therefore, penalty appeal of the Revenue is not sustainable. Accordingly, order of the ld.CIT(A) is upheld, and ground of appeal of the Revenue is rejected.

In the result, appeal of the Revenue is dismissed. Pronounced in the Open Court on 11th October, 2021