INCOME TAX OFFICER, WARD-2-1, JAIPUR vs. SHRI GULAM MUSTAFA ANSARI, JAIPUR

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ITA 707/JPR/2017Status: DisposedITAT Jaipur26 October 2017AY 2007-084 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 forming the basis of the penalty were deleted in the quantum proceedings, there was no justification for levying the penalty. Therefore, the order of the CIT(A) cancelling the penalty was affirmed.

What were the facts?

The Revenue appealed against the deletion of penalty under Section 271(1)(c) by the CIT(A). The CIT(A) had deleted the penalty because the additions made by the AO, which formed the basis for the penalty, were previously deleted by the ITAT in quantum proceedings.

What were the issues?

Whether penalty under Section 271(1)(c) can survive if the additions on which it was based have been deleted in quantum proceedings.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR

Before: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 707/JP/17

Hearing: 24/10/2017

Heard together (2 matters)

ITA No. 707/JP/17
ITA No. 708/JP/17

Read from the judgment's own cause title. This page is filed under one of them.

PER SHRI VIKRAM SINGH YADAV, A.M. These are two appeals filed by the Revenue against the orders of Ld. CIT(A)- I, Jaipur dated 28.07.2017 in case of Shri Gulam Mustafa Ansari for A.Y. 2007-08 and Shri Gulam Haider Ansari for A.Y. 2007-08 respectively. In ITA No. 707& 708/JP/17 ITO vs Sh. Gulam Mustafa Ansari and others its appeals, the Revenue has challenged the deletion of penalty u/s 271 (1)(c) by the ld. CIT(A).

2.

At the outset, the ld. AR submitted that in the quantum proceedings, the Tribunal has allowed the appeal of the assessee and has deleted the addition made by the AO in both the cases. It was accordingly submitted that since the addition has been deleted by the Tribunal, the consequent penalty levied by the AO has rightly been deleted by the ld. CIT(A).

3.

Per contra, the ld. DR submitted that the Revenue has not accepted the order of the Tribunal in the quantum proceedings and has filed an appeal before the Hon’ble High Court. Further, he relied on the order of the Assessing Officer.

4.

In ITA No. 707/JP/2017, the relevant findings of the ld. CIT(A) are reproduced as under:- “(iii) I have duly considered the submission of the appellant, the penalty order and the material placed on record. It is noted that vide above referred order, the appeal of the appellant has been allowed by the Hon’ble ITAT, Jaipur. It may be mentioned that the addition of Rs. 60,12,219/- was deleted by the Hon’ble ITAT, 967/JP/2015 for AY 2005-06 as the facts of these cases were similar.

(iv) As the addition amounting to Rs. 60,12,219/- has been deleted by the Hon’ble ITAT, Jaipur, there remains no basis for imposition of penalty u/s 271(1)(c) of the Act. It may be mentioned that in ITO vs Sh. Gulam Mustafa Ansari and others the case of K.C. Builders vs. ACIT [2004] 135 Taxman 461 (SC), it has been held by the Hon’ble Apex Court that:

“where the additions made in the assessment order, on the basis of which penalty for concealment was levied, are deleted, there remains no basis at all for levying the penalty for concealment and, therefore, in such a case no such penalty can survive and the same is liable to be cancelled as in the instant case. Ordinarily, the penalty cannot stand if the assessment itself is set aside. Where an order of assessment or reassessment on the basis of which penalty has been levied on the assessee has itself been finally set aside or cancelled by the Tribunal or otherwise, the penalty cannot stand by itself and the same is liable to be cancelled as in the instant case ordered by the Tribunal and later cancellation of penalty by the authorities.”

(v) In view of the above discussion, as the addition made by the AO and sustained by Ld. CIT(A) has been deleted by the Hon’ble ITAT, Jaipur, the penalty of Rs. 18,90,000/- imposed by the AO u/s 271(1)(c) of the Act has no legs to stand and cannot be upheld, hence hereby cancelled.”

5.

Similarly, in ITA No. 708/JP/2017, the ld. CIT(A) has deleted the levy of penalty following the same reasoning as given in ITA No. 707/JP/2017. 6. We have heard the rival submissions and perused the material available on record. Given that the very basis for levy of penalty has been deleted by the Co-ordinate Bench in the quantum proceedings in both the cases, there is no basis left for levy of consequent penalty. In view of the same, we hereby affirmed the order of the ld. CIT(A) where the penalty has rightly been deleted in both cases. Order pronounced in the open court on 26/10/2017. ¼dqy Hkkjr ½ ¼foØe flag ;kno½ (Kul Bharat) (Vikram Singh Yadav) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Jaipur Dated:- 26/10/2017 *Santosh आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- The ITO, Ward-2(1), Jaipur. 1. izR;FkhZ@ The Respondent- Shri Gulam Mustafa Ansari, Shri Gulam

2.

Haider Ansari, Jaipur vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए 5. xkMZ QkbZy@ Guard File (ITA No. 707 & 708/JP/2017) 6. vkns'kkuqlkj@ By order, सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत.

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