RAJU TIRATHDAS RAMCHANDANI,MUM vs. INCOME TAX OFFICER-22(3)(1), MUM

Fact in brief is that assessment u/s 144 r.w.s 147 of the Act was finalized on 04.03.2013. During the course assessment A.O noticed that assessee has made total investment of Rs.14,00,000/- during the year in all Templaton India Treasury Management Account Regular Plan – Weekly dividend plan scheme. The A.O stated that during the course of ITA No.2252/Mum/2022 A.Y. 2005-06 2 Raju Tirathdas Ramchandani Vs. Income Tax Officer -22(3)(1)

Assessee filed appeal before the ld. CIT(A). Even before the ld. CIT(A) assessee had not made any compliance, therefore, ld.CIT(A) has confirmed the penalty levied by the A.O. However, the ITAT, Mumbai, vide order dated 29.06.2016 in respect of the quantum addition of Rs.14,00,000/- set aside the order of ld. CIT(A) and remanded the matter back to the file of the A.O. The assessing officer while giving effect to the order of the ITAT vide order dated 14.08.2017 passed the order u/s 143(3) r.w.s 254 of the Act without making any addition to the returned income.

During the course of appellate proceedings before us at the outset the ld. Counsel contended that the order against which penalty levied had already been set aside by the ITAT and no further addition was made by the A.O. Therefore, the impugned penalty is required to be deleted. The ld. Counsel also contended that notice issued u/s 274 dated 04.03.2013 in the case of the assessee for levying penalty u/s 271(1)(c) of the Act is also defective because the A.O has not striked out the irrelevant portion.

Heard both the sides and perused the material on record. Without reiterating the facts as elaborated above the quantum addition on the basis of which penalty was set aside to the file of the A.O vide ITAT order dated 29.06.2016. Thereafter the A.O vide order dated 11.08.2017 u/s 143(3) r.w.s 254 of the Act has accepted the returned income without making any addition. In view of the above facts we consider that once the quantum addition on the basis of which penalty levied is deleted then the penalty become infructuous. We have also perused the notice u/s 274 dated 04.03.2013 issued by the A.O and noticed that A.O has not striked out the irrelevant portion and did not specify the limb under which the penalty is initiated, therefore, following the decision of Hon’ble juri ictional High Court Mohd. Farhan A. Shaikh Vs. DCIT (2021) 434 ITR 1 (Bom) (HC), we consider that the impugned penalty is not sustainable. Therefore, the grounds of appeal of the assessee are allowed.

In the result, the appeal of the assessee is allowed.