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

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

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

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.

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.

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

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.

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