ACIT, CIRCLE-52(1), NEW DELHI vs. SUSHMITA GUPTA, NEW DELHI

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ITA 6478/DEL/2017Status: DisposedITAT Delhi06 July 2021AY 2009-104 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the additions made in the quantum assessment proceedings, which formed the basis for the penalty, were subsequently deleted by the Tribunal itself, there was no basis for levying the penalty. Therefore, the penalty was not sustainable.

What were the facts?

The Assessing Officer (AO) initiated penalty proceedings under Section 271(1)(c) for concealment of income and levied a penalty of Rs. 50,98,500. The Commissioner of Income-tax (Appeals) deleted this penalty. The Revenue appealed this deletion to the Tribunal.

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the underlying additions in the assessment order have been deleted. Whether the CIT(A) erred in deleting the penalty wholly.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 271AAA

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH ‘G’ : NEW DELHI

Before: SHRI O.P. KANT & SHRI KULDIP SINGH

For Appellant: Shri Abhishek Mathur, CA
For Respondent: Shri Prakash Dubey, Senior DR
Hearing: 06.07.2021

PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, ACIT, Circle 52 (1), New Delhi (hereinafter referred to as ‘the Revenue’) by filing the present appeal sought to set aside the impugned order dated 26.05.2017 passed by the Commissioner of Income-tax (Appeals)-31, New Delhi dismissing the penalty order dated 04.02.2014 passed under section 271(1)(c) of the Income-tax Act, 1961 (for short ‘the Act’) qua the assessment year 2009-10 on the grounds inter alia that :-

1.

“(i) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the penalty levied by the A.O. u/s 271(l)(c) of the Income Tax Act, 1961 amounting to Rs.50,98,500/- and not appreciating the fact that A.D. has levied penalty after recording the satisfaction that the assessee had willfully concealed the income. (ii) Without prejudice to the above, the Ld. CIT(A) has erred in deleting the penalty wholly instead of restricting the same to the extent of penalty leivable u/s 271AAA as he was convinced that it is mandatory to do so. (iii) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in admitting the additional grounds of appeal taken by the assessee and deleting the penalty levied by the A.O. u/s 271(l)(c) of the Income Tax Act, 1961 amounting to Rs.50,98,500/- notwithstanding holding that A.O. is however, free to initiate penalty proceedings u/s 271AAA instead of initiating the penalty proceedings himself u/s 271AAA as the limitation to initiate penalty proceeding by Assessing officer has already elapsed.”

2. Briefly stated the facts necessary for adjudication of the controversy at hand are : On the basis of assessment completed under section 143(3) of the Act, penalty proceedings were initiated u/s 271(1)(c) of the Act for concealing the particulars of income. Declining the contentions raised by the assessee, AO proceeded to levy the penalty of Rs.50,98,500/- @ 100% of the tax sought to be evaded.

3. Assessee carried the matter by way of appeal before the ld. CIT (A) who has deleted the penalty by allowing the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal.

4.

We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.

5.

At the very outset, it is brought to our notice by the ld. AR for the assessee that additions made in the quantum proceedings have since been deleted by the Tribunal in assessee’s own case in vide order dated 21.12.2018 and as such, penalty levied is not sustainable and brought on record the copy of the order of the Tribunal dated 21.12.2018 (supra). 6. Undisputedly, coordinate Bench of the Tribunal vide order dated 21.12.2018 (supra) deleted the additions. In these circumstances, the penalty levied by the AO is not sustainable in view of the law laid down by the Hon’ble Apex Court in case cited as K.C. Builders & Anr vs. ACIT – 265 ITR 562 (SC) because “when the addition made in the assessment order on the basis of which penalty for concealment is levied have been deleted there remains no basis at all for levying the penalty for concealment and in such case, no penalty can survive and the penalty is liable to be cancelled.” So, in view of the matter, finding no illegality or perversity in the impugned order passed by the ld. CIT (A), the appeal filed by the Revenue is hereby dismissed. Order pronounced in open court on this 6th day of July, 2021.

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