KALNA II CADP FARMERS SERVICE CO-OP. SOCIETY LTD.,KOLKATA vs. I.T.O., WARD - 1(2), BURDWAN, BURDWAN

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ITA 2/KOL/2023Status: DisposedITAT Kolkata27 April 2023AY 2016-20174 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the basis for computing the penalty (the addition to income) was no longer available after the CIT(Appeals)'s decision, no penalty could be imposed. Therefore, the penalty was deleted.

What were the facts?

The assessee's appeal concerns a penalty imposed under Section 271(1)(c) of the Income Tax Act. The penalty was computed based on an addition to the assessee's income. However, the addition itself was later deleted by the CIT(Appeals) in the quantum appeal.

What were the issues?

Whether a penalty under Section 271(1)(c) can be sustained when the underlying addition to income, on which the penalty was computed, has been deleted.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, KOLKATA

Before: Shri Rajpal Yadav, Vice- & Shri Rajesh Kumar

Per Shri Rajpal Yadav, Vice-President (KZ):- The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals), 1 A.Y. 2016-2017 Kalna II CADP Farmers Service Co-op. Society Limited National Faceless Appeal Centre (NFAC), Delhi dated 29.11.2022 passed for A.Y. 2016-17. 2. The assessee has taken four grounds of appeal. However, its grievances revolve around a single issue, namely ld. CIT(Appeals) has erred in confirming the penalty of Rs.4,44,815/- imposed under section 271(1)(c) of the Income Tax Act.

3.

The ld. Counsel for the assessee has placed on record a paper book containing 44 pages. He pleaded that the addition on which this penalty has been computed, has been deleted by the ld. 1st Appellate Authority on the quantum appeal. Copy of the ld. CIT(Appeals)’s order dated 14.07.2020 passed on the assessment order dated 24.12.2018 passed under section 143(3) is available on pages no. 6 to 14 of the paper book.

4.

The ld. D.R., on the other hand, was unable to controvert this fact.

5.

On due consideration of the above facts, we are of the view that sub-clause (iii) of section 271(1)(c) provides a mechanism for computation of penalty. The penalty is to be computed on the basis of the addition made to the income of the assessee disclosed in the return filed under section 139(1). The penalty could be either equivalent to the taxes sought to be evaded by the assessee or maximum to the extent 300 times. Since the very 2 A.Y. 2016-2017 Kalna II CADP Farmers Service Co-op. Society Limited foundation to compute the penalty is no more available after the decision of the ld. CIT(Appeals) on the assessment order, therefore, no penalty could be imposed upon the assessee. Accordingly, we allow this appeal of the assessee and delete the penalty.

6.

In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on April 27, 2023.

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