SH. DHIRAJ JAIN,NEW DELHI vs. ITO, NEW DELHI

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ITA 6671/DEL/2013Status: DisposedITAT Delhi10 March 2022AY 2003-044 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the quantum assessment proceedings had been quashed by a previous order. Since the penalty was based on the assessment, and the assessment was invalid, the penalty was also quashed.

What were the facts?

The Assessing Officer levied a penalty of Rs. 58,718 under Section 271(1)(c) for disallowing interest paid to certain entities. The assessee appealed this penalty.

What were the issues?

Whether a penalty under Section 271(1)(c) can be sustained when the underlying assessment proceedings have been quashed.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 153C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, [ DELHI BENCH “B”: NEW DELHI ]

Before: SHRI AMIT SHUKLA & DR. B.R.R. KUMAR

For Appellant: Ms. Suman Jain
For Respondent: Shri Rajesh Kumar Dhanesta
Hearing: 10/03/2022Pronounced: 10/03/2022

O R D E R PER AMIT SHUKLA, J. M.

1.

The aforesaid appeal has been filed by the assessee against the impugned order dated 11.10.2013 passed by the ld. Commissioner of Income Tax (Appeals)–IV, New Delhi [hereinafter referred to CIT (Appeals)], in relation to the penalty proceedings

2 under Section 271(1)(c) of the Income Tax Act, 1961 (the Act) for assessment year 2003-04.

2.

Grounds of appeal raised by the assessee are as under:-

“1. That the CIT (Appeals) is erred under the law while confirming the order of A.O., imposing the penalty of Rs.58,718/- under Section 271(1)(c) of the Act for filing inaccurate particulars of income and its concealment. 2. That any other grounds of appeal may be added / deleted or amended at the time of hearing. “

3.

Brief facts of the case are that penalty of Rs.58,718/- was levied on the assessee on account of interest paid to entities. The Assessing Officer held that it is from various funds received from income and for not making investment in the interest bearing loan and advances and, therefore, interest paid to above persons was not allowable as deduction.

4.

Before us, the ld. Counsel submitted that in the quantum proceedings the Tribunal in (Del) of 2016 have quashed the assessment. The entire basis for the levy of penalty has no legs to stand.

5.

On the other hand, the DR relied upon the order of the CIT (Appeals).

6.

On perusal of the material placed before us and Tribunal’s order in the quantum proceedings in (Del) of 2016, we find that the Tribunal has quashed the proceedings under Section 153C of the Act as the addition was not based on any 3 incriminating material. Thus, as the assessment has been quashed, there is no basis for levy of penalty. Accordingly, penalty levied by the Assessing Officer and confirmed by the CIT (Appeals) is quashed.

7.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open court on: 10/03/2022.

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