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Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘SMC’
Before: SHRI RAJPAL YADAV & SHRI WASEEM AHMED
PER RAJPAL YADAV, JUDICIAL MEMBER : Assessee is in appeal before the Tribunal against order of the ld.CIT(A)-7, Ahmedabad dated 22.8.2017 passed for the Asstt.Year 2010-11.
Though the assessee has taken three grounds of appeal, but his grievance revolves around a single issue viz. the ld.CIT(A) has erred in confirming penalty of Rs.2,82,4323/- which was imposed by the AO under section 271(1)(c) of the Act.
At the very outset, the ld.counsel for the assessee submitted that penalty has been imposed by the assessee on the additions made by the
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AO vide assessment order dated 17.3.2015 passed under section 144 r.w.s. 147 of the Income Tax Act. This assessment order has been quashed by the Tribunal in ITA No.2380/Ahd/2016. The Tribunal has held that reopening of the assessment is bad in law, and therefore, re- assessment proceedings were quashed. Copy of the Tribunal order dated 1.11.2018 has been placed on record. On the strength of this order, the ld.counsel for the assessee contended that since additions made by the AO which has been considered for visiting the assessee with penalty stands deleted by virtue of quashing of assessment order, no penalty under section 271(1)(c) of the Act is sustainable. The ld.DR on the other hand was unable to controvert this contention of the ld.counsel of the assessee.
After hearing both sides and considering material available on record, 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 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 and 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. Since in the present case, basis for visiting the assessee with penalty has been extinguished by quashing the re-assessment order and thereby deleting addition by the Tribunal, the impugned penalty does not survive. In other words, there is no room for the Revenue to impose penalty under section 271(1)(c) in this case. Therefore, we cancel the impugned penalty
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and set aside both orders of the Revenue authorities passed under section 271(1)(c) of the Act.
In the result, appeal of the assessee is allowed. Pronounced in the Open Court on 22nd March, 2019.
Sd/- Sd/- (WASEEM AHMED) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER