THE ACIT, CIRCLE-4, BARODA vs. THE SPUNPIPE & CONSTRUCTION CO. (BARODA) PVT. LTD., BARODA

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ITA 286/AHD/2016Status: DisposedITAT Ahmedabad09 April 2018AY 2008-093 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the addition forming the basis for the penalty was deleted, the penalty under Section 271(1)(c) cannot be sustained. Therefore, the order of the CIT(A) deleting the penalty was upheld.

What were the facts?

The Revenue appealed against the deletion of penalty imposed under Section 271(1)(c) by the CIT(A). The original addition made by the AO regarding capital gains exemption under Section 54G was deleted by the Tribunal.

What were the issues?

Whether penalty under Section 271(1)(c) can be imposed when the addition leading to the penalty has been deleted by a higher appellate authority.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 54G

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SHRI RAJPAL YADAV & SHRI AMARJIT SINGH

Hearing: 10/04/2018

PER RAJPAL YADAV, JUDICIAL MEMBER: These two appeals are by Revenue against orders of ld.CIT(A)-2, Baroda both dated 16.11.2015 passed for Asstt.Years 2008-09 and 2009-10. In both the appeals, Revenue is aggrieved by action of the ld.CIT(A) in deleting penalty imposed by the AO under section 271(1)(c) of the Income Tax Act,1961.

2.

Brief facts of the case are that the assessee is engaged in the business of manufacturing of engineering goods and real estate. It has filed his return of income on 30.9.2010 declaring total income at Rs.2,30,42,790/- which was revised by the assessee on 20.11.2009 at Rs.2,31,27,140/-. The case of the

ITA No.286 AND 287/Ahd/2016 2 assessee was selected for scrutiny assessment and requisite notices were issued and served upon the assessee. During the assessment proceedings, it has been noticed by the AO that assessee has shown capital gain of Rs.2,19,05,070 for Asstt.Year 2007-08 and Rs.32,08,825/- for the Asstt.Year 2009-10 from sale of factory land. Earlier the said land was taken on rent from 1945 and in the year 1994 the assessee purchased the same. The assessee claimed exemption under section 54G of the Act in respect of capital gains derived on sale of land. From the explanation and documents furnished by the assessee in response to show cause notice issued by the AO to substantiate its claim under section 54G, the AO was not satisfied with the claim of the assessee and observed that the land was not used for its business of industrial undertaking of the assessee, but for the purpose of “developer” and that the benefit of deduction from the capital gain was available only in a case where any land, machinery or plant used for the purpose of the business of an industrial undertaking. Thus, according to the AO, since the assessee did not meet requirement of section 54G, he rejected the claim of the assessee and added back to the total income of the assessee. The ld.CIT(A) upheld the order of the AO.

3.

When the issue travelled to the Tribunal, the Tribunal deleted the impugned addition and set aside both orders of the Revenue authorities and allowed the claim of the assessee under section 54G of the Act.

4.

During the pendency of quantum proceedings before the Tribunal, the AO imposed penalty under section 271(1)(c) of the Act against the assessee, which was, however, deleted by the ld.CIT(A) by holding that no case has been made out by the Revenue against the assessee for furnishing inaccurate particulars of income in order to justify imposition of the penalty under

ITA No.286 AND 287/Ahd/2016 3 section 271(1)(c) of the Act. Aggrieved Revenue is now before us against the action of the AO in setting aside order under section 271(1)(c).

5.

At the very outset, the ld.counsel for the assessee submitted that addition made by the AO was deleted by the Tribunal vide order dated 22.06.2016 passed in ITA No.2932/Ahd/2011 and 2482/Ahd/2012. He placed on record copy of the Tribunal’s order. The ld.DR did not contest this submission of the ld.counsel. 6. We have duly considered rival contentions and gone through the record carefully. We find that sub-clause (iii) of section 271(1)(c) provides mechanism for quantification of penalty. It contemplates that the assessee would be directed to pay a sum in addition to taxes, if any, payable him, which shall not be less than , but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of income and furnishing of inaccurate particulars of income. In other words, the quantification of the penalty is depended upon the addition made to the income of the assessee. Since basis for visiting the assessee with penalty has been extinguished by deletion of the addition by the Tribunal vide above order of the Tribunal dated 22.06.2016, therefore, there cannot be any penalty upon the assessee under section 271(1)(c) of the Act, and accordingly, we do not disturb order of the ld.CIT(A) in setting aside the impugned order of the AO. We accordingly dismiss both appeals of the Revenue. 7. In the result, the appeals of the Revenue are dismissed. Order pronounced in the Court on 10th April, 2018 at Ahmedabad. Sd/- Sd/- (AMARJIT SINGH) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 10/04/2018

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