ACIT, CC- 19, NEW DELHI vs. NILKANTH CONCAST PVT. LTD., KUTCH

Brief facts, relevant to disposal of this appeal, are that for the assessment year 2005-06, assessment of the assessee was completed u/s. 153A read with section 143(3) of the Act by order dated 03.08.2007 at an income of Rs.1,90,02,249/- by making several additions as against Nil income declared by assessee. Such additions were made on account of unexplained cash credits u/s. 68 in the case of M/s. Baba Kishore Enterprises and Others, unexplained expenditure u/s. 69C of the Act, bogus loans in case of Sh. Rajpal, disallowance u/s. 40A(3), unexplained investment in factory at village Vadala, unexplained cost of construction of factory building and unexplained cash in saving bank account at Delhi. In quantum appeal preferred by the assessee, ld. CIT(A) deleted the additions made on account of bogus loans in the case of Shri Raj Pal and unexplained expenditure u/s. 69C and partially deleted the additions made on account of disallowance u/s. 40A(3) and investment in the factory premises at village Vadala. Remaining additions were sustained by the ld. CIT(A). Based on such additions, the Assessing Officer initiated penalty proceedings imposing a penalty of Rs.3,76,09,923/- u/s. 271(1)(c) of the Act.

Assessee preferred appeal against the penalty order before the ld. CIT(A), who deleted the penalty imposed, by relying on the order of ITAT, Delhi Benches in the quantum appeal of the assessee for the impugned assessment year, whereby the assessment and additions made by Assessing Officer stood quashed.

Learned DR, though relied on the penalty order, but could not controvert the findings of the ld. CIT(A) that once the assessment order itself does not survive, the imposition of penalty on the basis of the calculation of tax sought to be evaded determined as per the assessment order cannot be sustained.

None is present on behalf of the assessee. It could be seen from the record that the notice was sent to the assessee at the address given in memorandum of appeal. If the assessee is available in such address, such notice should have been served on the assessee. If for any reason, the assessee is not available there, it is for the assessee to make arrangements for service of such notice by furnishing the address where the assessee would be available, or to deliver it to some authorised person, or by making request to the postal department to detain the mail till the assessee claims the same. Since the assessee does not seem to have adopted any of these methods, we have no alternate but to decide the appeal on merits based on the material available on record.

It is not in dispute that the assessment order for the impugned assessment year stood quashed by this Bench of Tribunal in quantum appeal No. 2237/Del/2012, filed by assessee, by order dated 14.10.2015 and the additions sustained by the ld. CIT(A) in quantum appeal stood deleted. Once, the additions on the basis of which the impugned penalty is imposed are deleted by the Tribunal, the very basis of imposition of such penalty stands collapsed and there remains no justification to sustain any penalty, as done by the ld. CIT(A) in the impugned order. We, therefore, find no illegality or irregularity in the order of ld. CIT(A). Consequently, the appeal of the Revenue is dismissed being devoid of merits.