THE DCIT, CIRCLE-4(1) (1), AHMEDABAD vs. M/S. SHAH FOILS PVT. LTD., AHMEDABAD

In both the appeals, the Revenue has challenged the action of the CIT(A) in deleting penalty of Rs.25,51,499/- and Rs.1,75,58,793/- for AYs. 2005-06 & 2006-07 respectively under s. 271(1)(c) of the Act which was reversed by the CIT(A).

When the matter was called for hearing, before the Tribunal, the learned AR for the assessee submitted at the outset that the quantum additions giving rise to the impugned penalty has been deleted by the co-ordinate bench in ITA No. 300/Ahd/2013 pertaining to AY 2005-06. It was further submitted that the aforesaid order of the ITAT was challenged by the Revenue before the Hon’ble Gujarat High Court under s.260A of the Act and the hon’ble Gujarat High Court was pleased to dismiss the appeal of the Revenue in Tax Appeal No. 993 of 2017, judgment dated07.02.2018. The learned AR submitted that the additions in 2005-06 & 2006-07 are identical and therefore where the very basis of imposition of penalty does not survive. The penalty under s.271(1)(c) of the Act cannot be naturally follow.

The learned DR, on the other hand, relied upon the order of the AO but could not controvert the averments made on behalf of the assessee.

We have heard the rival submissions. In view of the fact that the quantum additions/disallowances itself does not survive and ceases to exist having regard to the appellate order of the ITAT in quantum proceedings. The very basis for imposition of penalty under s. 271(1)(c) does not survive any more. Therefore,

In the result, appeals of the Revenue are dismissed.