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Facts
Multiple assessees, including Rama Pashu Aahar Pvt. Ltd., Rama Hygienic Products Pvt. Ltd., and Rama Allied Products Marketing Pvt. Ltd., were subjected to penalties under Section 271(1)(c) of the Income-tax Act, 1961, following assessments completed under Section 153A/143(3). The penalties were levied for alleged concealment of income and confirmed by the Ld. CIT(A) for various assessment years.
Held
The Income Tax Appellate Tribunal (ITAT) noted that coordinate benches had previously quashed the quantum assessment orders under Section 153A in the assessees' own cases, finding no incriminating material. Citing the Apex Court's decision in K.C. Builders & Anr vs. ACIT, the ITAT held that once the additions made in the assessment order are deleted, the basis for levying penalty for concealment ceases to exist. Consequently, the penalties were not sustainable and were set aside.
Key Issues
Whether penalty under Section 271(1)(c) for concealment of income can be sustained when the underlying quantum assessment completed under Section 153A has been quashed for lack of incriminating material.
Sections Cited
153A, 143(3), 271(1)(c)
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Before: SHRI MAHAVIR SINGH & SHRI S. RIFAUR RAHMAN
IN THE INCOMETAXAPPELLATE TRIBUNAL DELHI BENCH ‘F’, NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT and SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER 2674 & 2675/DEL/2024 (Assessment Years : 2009-10, 2010-11 & 2011-12) Rama Pashu Aahar Pvt. Ltd., vs. ACIT, CC – 14, H.No.77-78, Rama Residency, New Delhi. Siyana Road, Bulandshahr – 203 001 (Uttar Pradesh). (PAN: AACCR1144B) 2688, 2689, 2690, 2691 & 2692/DEL/2024 (Assessment Years : 2009-10, 2010-11, 2011-12, 2012-13, 2013-14 & 2014-15) Rama Hygienic Products Pvt. Ltd., vs. DCIT, CC – 14, 27/29, Karol Bagh, S.O. Karol Bagh, New Delhi. Central Delhi, New Delhi – 110 005. (PAN: AAACR4597A) ITA Nos.2668, 2669, 2670, 2671 & 2672/DEL/2024 (Assessment Years : 2010-11, 2011-12, 2012-13, 2013-14 & 2014-15) Rama Allied Products Marketing Pvt. Ltd., vs. DCIT, CC – 14, 11/5B, Param Tower, Pusa Road, New Delhi. New Delhi – 110 005. (PAN: AACCR0688N) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Madhav Kapur, Advocate REVENUE BY : Smt. Amisha Gupta, CIT DR Date of Hearing : 27.02.2025 Date of Order : 09.04.2025
O R D E R
PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :
The assessees, Rama Pashu Aahar Pvt. Ltd., Rama Hygienic Products Pvt. Ltd. and Rama Allied Products Marketing Pvt. Ltd. has filed appeals against the order of ld. Commissioner of Income-tax (Appeals)-26, New Delhi (hereinafter referred to ‘Ld. CIT (A)’) all dated 07.05.2024 for different assessment years.
Since the issues are common and the appeals are connected, therefore, the same are heard together and being disposed off by this common order.
At the time of hearing, it was pointed out that the issue under consideration is penalty and the quantum appeals are already heard. It is due to pronounce. We observed that ITAT vide order dated 28.02.2025 in group cases in & 19 ors. in the cases of aforesaid assessees in quantum matters has decided the issue in favour of the assessee and against the Revenue. 4. First we take up for AY 2009-10 in the case of Rama Pashu Aahar Pvt. Ltd. as lead case. The only issue involved in the present case is levying of penalty u/s 271 (1)(c) of the Income-tax Act, 1961 (for short ‘the Act’) of Rs.7,23,020/- @ 100% of the tax sought to be 2674 & 2675/DEL/2024 ITA Nos.2687, 2688, 2689, 2690, 2691 & 2692/DEL/2024 ITA Nos.2668, 2669, 2670, 2671 & 2672/DEL/2024 evaded.
Briefly stated the facts necessary for adjudication of the controversy at hand are : On the basis of assessment completed under section 153A/143(3) of the Act, penalty proceedings were initiated u/s 271(1)(c) of the Act. Declining the contentions raised by the assessee, AO proceeded to levy the penalty of Rs.7,23,020/- @ 100% of the tax sought to be evaded.
Aggrieved assessee preferred an appeal before the ld. CIT (A) who has confirmed the penalty by dismissing the appeal.
Aggrieved, the assessee has come up before us by way of filing the present appeal.
Considered the rival submissions and material placed on record. We observed that coordinate bench in the quantum proceedings in assessee’s own case in for AY 2009-10 vide order dated 28.02.2025 held that the assessment completed u/s 153A is without any incriminating material and, accordingly quashed the assessment order. Hence, we hold that when the assessment order in quantum appeal is quashed, the penalty levied on the basis of the quantum appeal is not sustainable.
Undisputedly, coordinate Bench of the Tribunal vide order dated 29.02.2025 (supra) quashed the assessment. In these circumstances, the 2674 & 2675/DEL/2024 2688, 2689, 2690, 2691 & 2692/DEL/2024 ITA Nos.2668, 2669, 2670, 2671 & 2672/DEL/2024 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, the penalty order passed by the AO and confirmed by the ld. CIT (A) is set aside and the appeal filed by the assessee being ITA No.2673/Del/20245 is hereby allowed.
With regard to assessees, Rama Pashu Aahar Pvt. Ltd., Rama Hygienic Products Pvt. Ltd. and Rama Allied Products Marketing Pvt. Ltd., in other 9 appeals for different assessments years i.e. AYs 2009-10 to 2012-13 are concerned, since the facts and issue are exactly similar to assessee’s appeal in AY 2009-10 in the case of Rama Pashu Aahar Pvt. Ltd. our above findings in the said case in AY 2009-10 are applicable mutatis mutandis in all the other 9 appeals of the aforesaid assessees in AYs 2009-10 to 2012-13. Accordingly, all the other 9 appeals being & 2675/Del/2024 in Rama Pashu Aahar Pvt. Ltd., ITA Nos.2687 to 2690/Del/2025 in Rama Hygienic Products Pvt. Ltd. and ITA Nos.2668 to 2670/Del/2025 in Rama Allied Products Marketing Pvt. Ltd. filed by the assessees are allowed.
2674 & 2675/DEL/2024 2688, 2689, 2690, 2691 & 2692/DEL/2024 ITA Nos.2668, 2669, 2670, 2671 & 2672/DEL/2024 11. With regard to other appeals for AYs 2013-14 & 2014-15 in the cases of Rama Hygienic Products Pvt. Ltd. and Rama allied Products Marketing Pvt. Ltd., we observed that the additions in these cases in quantum appeals have been deleted by the coordinate Bench vide order dated 28.02.2025 on merits. Considering the above factual matrix that “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., the penalty levied in these cases are deleted and the appeals in the aforesaid assessment years are allowed.
To sum up : all the appeals filed by different assessees are allowed. Order pronounced in the open court on this 9th day of April, 2025.