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Facts
The assessment order determined a total income of Rs.20,64,97,610/-. This addition was upheld by the CIT(A) but subsequently deleted by the ITAT. Following this, the AO initiated penalty proceedings under section 271(1)(c) and levied a penalty of Rs.6,92,76,334/-. The CIT(A) deleted this penalty, holding that it was not sustainable as the quantum addition itself had not survived.
Held
The Tribunal held that since the quantum addition was already deleted by a coordinate bench of the ITAT, the penalty levied in respect of such addition becomes infructuous. Therefore, there was no infirmity in the order of the CIT(A).
Key Issues
Whether penalty under Section 271(1)(c) can survive when the quantum addition on which it is based has been deleted by the Tribunal?
Sections Cited
250, 143(3), 147, 274, 271(1)(c)
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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI ANIKESH BANERJEE & SMT. RENU JAUHRI
O R D E R Per: Anikesh Banerjee (JM): The instant appeal of the assessee was filed against the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter, ‘Ld.CIT(A)’] passed under section 250 of the Income Act, 1961 [hereinafter, ‘Act’] date of order 23/07/2025 for Assessment Year 2008-09. The impugned order arises from the order of the Learned Deputy Commissioner of Income-tax- 15(2)(1), Mumbai (in
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.
Lionbridge Technologies LLP 4. The Ld. AR, on the other hand, fully supported the order of the Ld. CIT(A), and specifically submitted that the quantum addition was deleted by the ITAT, Mumbai Bench “I” in order dated 27/05/2020. The Ld. AR placed a copy of the said ITAT order on record.
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.