PR. COMMISSIONER OF INCOME TAX vs. M/S AJMER VIDYUT VITRAN NIGAM LTD.

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ITA/155/2019HC RajasthanRJHC02099417201908 November 2021Bench: AKIL KURESHI,REKHA BORANA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no question of law arises from the impugned order of the Income Tax Tribunal. The Tribunal had deleted the penalty under Section 271(1)(c) on the specific ground that the quantum additions, in respect of which the penalty was levied, had been deleted by the Tribunal and subsequently upheld by the High Court in the assessee's own case. The Tribunal reasoned that if the addition itself is not sustainable, then the penalty levied in respect of such disallowance is also not sustainable. The High Court found this reasoning to be sound and agreed that the penalty would not survive if the underlying addition was deleted. Therefore, all the appeals filed by the revenue were dismissed.

What were the facts?

These are a group of appeals filed by the Principal Commissioner of Income Tax, Ajmer, against M/s Ajmer Vidyut Vitran Nigam Ltd. The appeals arise from common issue concerning the deletion of penalty by the Income Tax Tribunal. The Tribunal had deleted the penalty on the ground that the quantum additions, in respect of which the penalty was levied, had themselves been deleted by the Tribunal and upheld by the High Court. The Tribunal's order noted that the issue was finally settled in favour of the assessee by the High Court in the assessee's own case. Consequently, the penalty levied under Section 271(1)(c) was deemed unsustainable.

What were the issues?

1. Whether the Tribunal was justified in deleting the penalty imposed by the Assessing Officer, when the quantum additions leading to the penalty were themselves deleted by the Tribunal and upheld by the High Court. This is a question of law arising from the interpretation and application of penalty provisions in light of the deletion of the primary addition. Assessee's Contention: The assessee's position, as reflected in the Tribunal's order, is that once the underlying additions are deleted by higher authorities, the penalty levied in respect of those additions cannot survive. The Tribunal's decision in the assessee's own case by the High Court supports this view. Revenue's Contention: The revenue's appeal challenges the Tribunal's justification for deleting the penalty. The revenue implicitly argues that the penalty should have been sustained despite the deletion of the quantum additions, suggesting a separate basis for penalty imposition or that the deletion of additions does not automatically nullify the penalty.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 151/2019 Principal Commissioner Of Income Tax, Ajmer ----Appellant Versus M/s Ajmer Vidyut Vitran Nigam Ltd., Vidyut Bhawan, Panchsheel Nagar, Makarwali Road, Ajmer Pan Aacca8562 E ----Respondent D.B. Income Tax Appeal No. 152/2019 Pr. Commissioner Of Income Tax, Ajmer (Rajasthan) ----Appellant Versus M/s Ajmer Vidyut Vitran Nigam Ltd., Vidyut Bhawan, Panchsheel Nagar, Makarwali Road, Ajmer Pan Aacca8562 E ----Respondent D.B. Income Tax Appeal No. 153/2019 Principal Commissioner Of Income Tax, Ajmer ----Appellant Versus M/s Ajmer Vidyut Vitran Nigam Limited, Vidyut Bhawan, Panchsheel Nagar, Makarwali Road, Ajmer Pan Aacca8562 E ----Respondent D.B. Income Tax Appeal No. 154/2019 Pr. Commissioner Of Income Tax, Ajmer (Rajasthan) ----Appellant Versus M/s Ajmer Vidyut Vitran Nigam Ltd., Vidyut Bhawan, Panchsheel Nagar, Makarwali Road, Ajmer Pan Aacca8562 E ----Respondent D.B. Income Tax Appeal No. 155/2019 Pr. Commissioner Of Income Tax, Ajmer (Rajasthan) ----Appellant Versus M/s Ajmer Vidyut Vitran Nigam Ltd., Vidyut Bhawan, Panchsheel Nagar, Makarwali Road, Ajmer Pan Aacca8562 E

(2 of 3) [ITA-151/2019] ----Respondent D.B. Income Tax Appeal No. 156/2019 Principal Commissioner Of Income Tax, Ajmer ----Appellant Versus M/s Ajmer Vidyut Vitran Nigam Ltd., Vidyut Bhawan, Panchsheel Nagar, Makarwali Road, Ajmer Pan Aacca8562 E ----Respondent D.B. Income Tax Appeal No. 157/2019 Pr. Commissioner Of Income Tax, Ajmer (Rajasthan) ----Appellant Versus M/s Ajmer Vidyut Vitran Nigam Limited, Vidyut Bhawan, Panchsheel Nagar, Makarwali Road, Ajmer Pan Aacca8562 E ----Respondent For Appellant(s) : Mr. Nikhil Simlote and Mr. Salim Khan for Mr. R.B. Mathur For Respondent(s) : HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI HON'BLE KUMARI JUSTICE REKHA BORANA Order 08/11/2021 This group of appeals arises out of common issue namely that of deleting the penalty as has been done by the Income Tax Tribunal by the impugned judgments. The revenue has filed these appeals raising a question whether Tribunal was justified in deleting the penalty imposed by the Assessing Officer. The perusal of the judgment of the Tribunal would show that the penalty was deleted on the ground that quantum additions were deleted by the Tribunal and upheld by the High Court.

(3 of 3) [ITA-151/2019] In that view of the position, the question of penalty would not survive. In particular, we may notice the following portion of the judgment of the Tribunal:- “Thus it is clear that this issue is finally settled and decided in favour of the assessee by the Hon’ble High Court in assessee’s own case. Accordingly, in view of the fact that the addition itself was deleted by the Tribunal and then by the Hon’ble Jurisdictional High Court, then the penalty levied in respect of such disallowance is not sustainable. Accordingly, the penalty levied under Section 271 (1) (c) against the disallowance of prior period expenditure is deleted. In the result, appeals of the assessee are allowed and appeals of the revenue are dismissed.” In the result, no question of law arises. All the appeals are dismissed. (REKHA BORANA),J (AKIL KURESHI),CJ AKG/BRIJ MOHAN GANDHI /32-38

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