SHRENO LIMITED,,BARODA vs. THE ACIT, CIRCLE-4,, BARODA

The grievances in the respective appeals relate to confirmation/deletion of penalty which was levied by the Assessing Officer under Section 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).

It emerges out from the record that the Assessing Officer visited the assessee with the penalty under Section 271(1)(c) of the Act on two counts; (a) disallowance u/s 14A of the Act for Rs. 77,45,350/- and (b) foreign

At the time of hearing before us, it has been brought to our notice that both the aforesaid additions have been deleted by the Tribunal vide ITA No. 1452/Ahd/2012, decided on 27.12.2016. Copy of the Tribunal’s order has been placed on record. 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 additions made to the income of the assessee. Since basis for visiting the assessee with penalty has been extinguished by deleting additions by the Tribunal in its order dated 27.12.2016 (supra) in the quantum appeal of the assessee, the impugned penalty is non est, and accordingly penalty under Section 271(1)(c) of the Act stands cancelled. Appeal of the assessee is thus allowed and that of Revenue is dismissed.

In the result, appeal of the assessee is allowed; whereas the appeal of the Revenue is dismissed.