DCIT, YAMUNANAGAR vs. KUNAL CALCIUM LIMITED, YAMUNANAGAR

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ITA 907/CHANDI/2018Status: DisposedITAT Chandigarh24 April 2019AY 2005-063 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that no penalty under Section 271(1)(c) can be levied if the additions on which it is based have been deleted. Since the quantum additions were deleted by the ITAT, the penalty had no basis and was rightly deleted by the CIT(A).

What were the facts?

The Department appealed against the deletion of penalty levied under Section 271(1)(c) of the Income-tax Act. The penalty was based on additions made by the Assessing Officer, which were subsequently deleted by the ITAT in the assessee's own case for the same assessment years.

What were the issues?

The primary issue was whether penalty under Section 271(1)(c) can survive when the underlying additions are deleted. The Tribunal also considered the precedent set by the Supreme Court in K.C. Builders.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

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आदेश/Order Per N.K. Saini, Vice President:

These two appeals by the Department are directed against the common order dated 7.5.2018 of CIT(A), Panchkula.

2.

Since the issue involved is common and appeals were heard together so these are disposed off by this consolidated order for the sake of convenience and brevity.

3.

The common issue involved in both the appeals relates to the deletion of penalty levied by the Assessing officer u/s 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act').

4.

During the course of hearing, Ld. Counsel for the assessee at the very outset stated that the addition on the basis of which the penalty was levied by the Assessing officer has been deleted by the ITAT vide order

ITA Nos. 907 & 908-Chd/2018 M./s Kunal Calcium Limited, Yamunanagar

dated 6.2.2018 in ITA Nos. 46 & 47/Chd/2015 for the assessment year

2005-06 & 2006-07 respectively. Copy of the said letter was furnished

which is placed on record. It was pointed out that the Ld. CIT(A) also

deleted the impugned penalties for this reason that the quantum additions

had been deleted by the ITAT.

5.

In his rival submissions, the Ld. Sr. DR although supported the

orders of the authorities below but could not controvert the aforesaid

factual position narrated by the Ld. Counsel for the assessee.

6.

We have considered the rival submissions and have perused the

material available on record. In the present case, it is noticed that the Ld.

CIT(A) deleted the impugned additions levied by the Assessing officer u/s

271(1)(c) by observing in para 5 of the impugned order as under:-

“5. I have carefully considered argument of the counsel for the appellant and have also perused the order of the Hon'ble ITAT. The Hon'ble ITAT, Chandigarh in ITA No. 46 & 47/C/2015 vide its order dated 6.2.2018 in the appellant’s own case for the assessment year 2005-06 & 2006-07 allowed the appellant’s appeal. Since the quantum additions have been deleted by the ITAT, the penalty levied against the same has no legs to stand and is accordingly ordered to be deleted for both the years A.Y. 2005-06 and A.Y. 2006-07.”

7.

It is well settled that no penalty u/s 271(1)(c) of the Act can be

levied when the additions on the basis of which said penalty is levied, has

been directed to be deleted. In the present case, it is noticed that this

Bench of the Tribunal vide order dated 6.2.2018 in ITA Nos. 46 &

47/Chd/2015 for the assessment years 2005-06 and 2006-07 respectively

deleted the additions on the basis of which the Assessing officer levied the

impugned penalties u/s 271(1)(c) of the Act.

ITA Nos. 907 & 908-Chd/2018 M./s Kunal Calcium Limited, Yamunanagar

8.

On a similar issue, the Hon'ble Supreme Court in the case of K.

C. Builders & Others Vs ACIT (2004) 265 ITR 562 has held as under:-

“Where the additions made in the assessment order on the basis of which penalty for concealment is levied, are deleted, there remains no basis at all for levying penalty for concealment and, therefore, in such a case no penalty can survive and the penalty is liable to be cancelled. Ordinarily, penalty cannot stand if the assessment itself is set aside.” 9. In the present case also, the addition on the basis of which

the impugned penalty u/s 271(1)(c) of the Act was levied by the

Assessing officer has been deleted, therefore, the impugned

penalty was not leviable and the Ld. CIT(A) was fully justified in

deleting the same. We, therefore, do not see any merit in these

appeals of the Department.

10.

In the result, the appeals of the assessee are allowed. (Order Pronounced in the Court on 24/04/2019) Sd/- Sd/- संजय गग� एन के . सैनी (SANJAY GARG ) (N.K. SAINI) �या�यक सद�य/ Judicial Member उपा�य� / Vice President Dated : . 24. 04.2019 “आर.के.” आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File

आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar

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