Loading judgment…
Facts
The assessee's appeal was filed against an order related to a penalty levied under Section 271(1)(c) of the Income-tax Act, 1961. The original addition that formed the basis for the penalty had been set aside by the ITAT.
Held
The Tribunal found that the Ld. CIT(A) had correctly deleted the penalty, as the underlying addition was already set aside by the ITAT. However, the concluding remark of the Ld. CIT(A) stating the appeal was dismissed for statistical purposes was deemed inconsistent. The Tribunal directed a rectification to state the appeal was allowed for statistical purposes.
Key Issues
Whether a penalty can be sustained when the underlying addition forming its basis has been set aside by a higher authority. Discrepancy in the Ld. CIT(A)'s order between the findings and the final conclusion.
Sections Cited
271(1)(c), 35(2AB), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI ANIKESH BANERJEE
The instant appeal of the assessee filed against the order of the National Faceless Appeal Centre (NFAC), Delhi [for brevity, ‘Ld.CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in shot, ‘the Act) for the Assessment Year 2012- /Mum/2052 Chembond Material Technologies Ltd 13, date of order 25/06/2025. The impugned order emanated from the order of the Learned Deputy Commissioner of Income-tax, Circle 6(2)(1), Mumbai (in short, ‘the Ld.AO’) passed u/s 271(1)(c) of the Act, date of order dated 27/03/2019.
We heard the rival submissions and considered the documents available on the record. The Ld.AO levied the penalty u/s 271(1)(c) of the Act against the addition of Rs.45,55,004/- disallowance of weighted deduction u/s 35(2AB) of the Act. The said addition was challenged before the Ld.CIT(A) and the Ld.CIT(A) confirmed the said addition. Finally, the matter travelled before the ITAT, Mumbai Bench “C” and the ITAT, Mumbai Bench “C”, in order bearing dated 17/12/2019 set aside the issue pertaining to the addition to the file of the Ld.AO. But the Ld.AO had levied penalty by considering the addition as furnishing of inaccurate particulars of income and levied penalty @100% on the tax sought to be evaded amount to Rs.15,48,245/- rounded off amount to Rs.15,49,000/-. The assessee challenged the said penalty order before the Ld.CIT(A). The Ld.CIT(A), in the order considering the order of the co-ordinate bench of ITAT, Mumbai deleted the penalty, but at the final line he observed, “the appeal of the assessee is dismissed for statistical purpose.”. The Ld.CIT(A) has made the following observation which is reproduced as below: - “4 Appellate Proceedings During the course of appellate proceedings, the appellant made submissions on enablement of communication in the system. Decision It is seen that the appellant had filed an appeal before Ld. ITAT. Mumbai against the order of Ld. CIT(Appeals) dated 17/04/2015 Ld. ITAT, Mumbai Bench "C" vide their order in ITA по 5058/Mum/2017 Dated 17/12/2019 had set-aside the order of CIT(Appeals) and had remanded back the issue to the file of Assessing Officer for fresh adjudication. As a matter of fact, in compliance to this order of ITAT, the Assessing Officer has already passed the fresh assessment order on 31/03/2022.
Since the assessment order dated 20/03/2015, making quantum addition has already been set- aside by Ld. ITAT, any penalty levied on the basis of said order can not be sustained. Accordingly, the appeal becomes infructuous. Based on above discussions, appeal of the appellant is dismissed for statistical purposes.”
In our considered view, we find that the Ld. CIT(A) has rightly observed and correctly decided the issue relating to the deletion of penalty, as the underlying addition had already been set aside by the Hon’ble ITAT. However, in the concluding paragraph, the Ld. CIT(A) mentioned that “the appeal of the appellant is dismissed for statistical purposes.” The only grievance of the assessee is that such concluding remark—stating the appeal to be dismissed for statistical purposes— does not align with the preceding findings of the Ld. CIT(A). We find that the said concluding observation is inconsistent with the findings recorded in the earlier part of the appellate order. Accordingly, we direct that the concluding sentence be read as: “The appeal of the appellant is allowed for statistical purposes.” With this direction for necessary rectification in the impugned appellate order, we hold that no interference is otherwise required in the findings of the Ld. CIT(A). The appeal of the assessee is, therefore, allowed.