STANDARD CHARTERED GRINDLAYS PTY LTD. (FORMERLY ANZ GRINDLAYS BANK),NEW DELHI vs. DCIT, CIRCLE-3(1)(2), NEW DELHI

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ITA 4457/DEL/2017Status: DisposedITAT Delhi11 August 2021AY 2001-203 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the additions on which the penalty was levied have been deleted in the quantum appeal, the penalty itself does not survive. Therefore, the order of the CIT(A) sustaining the penalty is cancelled.

What were the facts?

The assessee's appeal challenges a penalty levied under Section 271(1)(c) of the IT Act. The penalty was based on two additions: disallowance of technology-related expenses and disallowance of club payments. The assessee argued that the penalty should be deleted as both additions were subsequently deleted by the Tribunal in the quantum appeal.

What were the issues?

Whether a penalty levied under Section 271(1)(c) can be sustained when the underlying additions forming the basis of the penalty have been deleted by a higher appellate authority.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH : D : NEW DELHI

Before: SHRI R.K. PANDA & MS SUCHITRA KAMBLE

For Appellant: Ms Shashi M. Kapila, Advocate
For Respondent: Shri Prabha Kant, CIT, DR
Hearing: 11.08.2021Pronounced: 11.08.2021

BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER Assessment Year: 2001-02 Standard Chartered Grindlays Pty Ltd. Vs DCIT, (Formerly ANZ Grindlays Bank), Circle 3(1)(2), C/o Shashi M Kapila, Advocate, New Delhi. 17th Mahatma Gandhi Road, Lajpat Nagar IV (Near Metro Hospital), New Delhi. PAN: AAACA1049A (Appellant) (Respondent) Assessee by : Ms Shashi M. Kapila, Advocate Revenue by : Shri Prabha Kant, CIT, DR Date of Hearing : 11.08.2021 Date of Pronouncement : 11.08.2021 ORDER

PER R.K. PANDA, AM:

1.

This appeal filed by the assessee is directed against the order dated 27.04.2017 of the CIT(A)-25, New Delhi, relating to assessment year 2001-02.

2.

Although a number of grounds have been raised by the assessee, these all relate to the order of the CIT(A) in confirming the penalty of Rs.14,47,45,008/- levied by the AO u/s 271(1)(c) of the IT Act.

3.

The ld. Counsel for the assessee, at the outset, submitted that the AO, in the order passed u/s 271(1)(c) of the IT Act, had levied penalty on the following two additions:-

(i) Disallowance of expenditure of Rs.68,10,18,767/- incurred by the assessee for access and user of technology related services for its business in India. (ii) Disallowance on account of payments made to clubs – Rs.30,000/-

4.

Referring to the order of the Tribunal in quantum appeal, vide ITAs No.2920/Del/2008 filed by the assessee and filed by the Revenue, order dated 26th October, 2020 for A.Y. 2001-02, she drew the attention of the Bench to para 18 of the order and submitted that the amount of Rs.30,000/- confirmed by the CIT(A) on account of club expenses have been deleted. Similarly, referring to para 30 of the order of the Tribunal, she submitted that the Tribunal has also deleted the disallowance of Rs.68,10,18,767/-. Thus, both the issues on which the penalty has been levied have been decided in favour of the assessee by the Tribunal in quantum appeal and, therefore, the penalty levied by the AO and sustained by the CIT(A) should be deleted.

5.

The ld. DR, on the other hand, fairly conceded that the issues stand decided in favour of the assessee.

6.

We have heard the rival arguments and perused the record. We find, the very basis on which the penalty has been levied does not survive in view of the decision of the Tribunal in quantum appeal whereby both the additions made by the AO stand deleted. Therefore, the penalty does not survive. Accordingly, the order of the CIT(A) sustaining the penalty levied by the AO u/s 271(1)(c) of the Act is cancelled and the grounds raised by the assessee are allowed.

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