IDEAL ENERGY PROJECTS LIMITED,NAGPUR vs. CENTRAL CIRCLE 5(3), MUMBAI

ITA 3343/MUM/2025Status: DisposedITAT Mumbai21 August 2025AY 2012-2013Bench: SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER SHRI SANDEEP SINGH KARHAIL (Judicial Member)1 pages
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What did the Tribunal hold?

The Tribunal held that the basis for levying the penalty was the disallowance of interest expenditure, which was subsequently allowed by the CIT(A) in the quantum appeal. Therefore, the penalty under Section 271(1)(c) was not sustainable.

What were the facts?

The assessee claimed a deduction of INR 18,32,316 for interest expenditure. The AO disallowed this deduction under Section 57 of the Income Tax Act, initiating penalty proceedings under Section 271(1)(c). The CIT(A) upheld the penalty, but later, in the quantum appeal, allowed the interest expenditure under Section 36(1)(iii) and directed it to be added to the cost of WIP.

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the addition forming the basis of penalty was subsequently deleted/allowed by the appellate authority?

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 250,Section 143(3),Section 147,Section 57,Section 148,Section 143(2),Section 142(1),Section 36(1)(iii)

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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

Before: SHRI NARENDRA KUMAR BILLAIYASHRI SANDEEP SINGH KARHAIL

For Appellant: Shri Hitesh P. Shah (Virtually appear)
For Respondent: Mr. Virabhadra S. Mahajan, CIT-DR

PER SANDEEP SINGH KARHAIL, J.M.

The present appeal has been filed by the assessee challenging the impugned order dated 15/03/2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals)-53, Mumbai, [“learned CIT(A)”], which in turn arose from the penalty order passed under section 271(1)(c) of the Act, for the assessment year 2012-13. 2

2.

The only grievance of the assessee is against the levy of penalty under section 271(1)(c) of the Act.

3.

The brief facts of t

The order continues below.

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