ACIT-15(1)(2),MUMBAI , MUMBAI vs. LIONBRIDGE TECHNOLOGIES LLP , MUMBAI

The brief facts of the case are that the assessment was completed under section 143(3) r.w.s. 147 of the Act on 29/03/2016, determining the total income at Rs.20,64,97,610/-. The assessee challenged the impugned assessment order before the Ld. CIT(A). The Ld. CIT(A) upheld the impugned addition. Thereafter, the assessee preferred an appeal before the ITAT, challenging both the legal grounds as well as the merits of the addition, and obtained relief. Consequently, the demand stood quashed. The Ld. AO thereafter issued a notice under section 274 r.w.s. 271(1)(c) of the Act and levied a penalty at 100% of the tax sought to be evaded, amounting to Rs.6,92,76,334/-. The penalty order was simultaneously challenged before the Ld. CIT(A). The Ld. CIT(A), relying upon the order of the ITAT, Mumbai Bench in date of pronouncement 27/05/2020, deleted the penalty on the ground that the quantum addition itself had not survived. Aggrieved, the revenue has filed the present appeal before us.

The Ld. DR submitted that the revenue has challenged the quantum order before the Hon’ble Bombay High Court. He further argued that the present penalty appeal should be kept in abeyance until the disposal of the quantum appeal by the Hon’ble Jurisdictional High Court. However, the Ld. DR was unable to produce any stay order or direction from the Hon’ble High Court directing the Tribunal to keep the penalty appeal in abeyance.

We have heard the rival submissions and perused the material available on record. We find that the quantum appeal arising from the assessment order has already been adjudicated by the ITAT, Mumbai Bench, and the impugned addition has been deleted. It is a settled proposition of law that when the quantum addition does not survive, the penalty levied in respect of such addition becomes infructuous. In view of this legal position, we find no infirmity in the order passed by the Ld. CIT(A). Accordingly, the appeal filed by the revenue is dismissed.