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Facts
The assessee HUF filed appeals against the confirmation of penalties levied under Section 271(1)(c) for assessment years 2007-08, 2009-10, and 2010-11. The penalties were based on additions made on a protective basis, while substantive additions were made in the hands of the Karta.
Held
The Tribunal held that since the substantive additions in the hands of the Karta were quashed by a previous order of the Tribunal and followed by the CIT(A), the basis for the protective additions and subsequent penalties ceased to exist.
Key Issues
Whether penalties levied on protective additions can sustain if the substantive additions are deleted or quashed, and whether reopening based on DVO's report without proper authority is valid.
Sections Cited
271(1)(c), 147, 148
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Income Tax Appellate Tribunal, PUNE BENCHES “B”, PUNE
Before: DR.MANISH BORAD & MS. ASTHA CHANDRA
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned three appeals at the instance of assessee are filed against the confirmation of penalties by the ld.CIT(A) u/s.271(1)(c) of the Income Tax Act, 1961 in relation to the assessment years 2007-08, 2009-10 and 2010-11 respectively.
At the outset, ld. Counsel for the assessee submitted that the impugned penalties have been levied in the hands of the assessee HUF on the additions made on protective basis. He submitted that the substantive additions were made in the hands of Karta Mr.Shivratan Motilal Rathi and further stated that in the quantum appeal this Tribunal in the case of Karta Mr.Shivratan Motilal Rathi for A.Yrs. 2004-05, 2008-09 and 2009-10 and 2011- 12 has quashed the re-assessment proceedings which were carried out based on the information received from the Departmental Valuation Officer (DVO). He further submitted that placing reliance on the decision of the Tribunal in to 733/PUN/2016, dated 11.03.2019 quashing the assessment orders for A.Y. 2004-05, 2008-09, 2009-10 and 2011-12 the ld.CIT(A) in the other two appeals of Karta for A.Yrs. 2007-08 and 2010-11 has quashed the reopening vide order dated 27.03.2019. Ld. AR submitted that since the substantive additions itself have been deleted, there remains no ground for levy of penalty on the protective addition which itself does not stand for. He further referring to the judgment of Hon’ble Punjab and Haryana High Court in the case of CIT vs. Behari Lal Pyare Lal [1983] 141 ITR 32 where it is held that protective order under law is possible but not order of protective penalties.
On the other hand, ld. Departmental Representative supported the orders of the lower authorities.
We have heard the rival contentions and perused the record placed before us. Admittedly, the impugned penalties have been levied in the hands of assessee HUF for the impugned years on the additions made on protective basis. It is also not in dispute that the substantive additions were made in the hands of Karta Shivratan Motilal Rathi. The substantive and protective additions were made in the re-assessment proceedings. The substantive additions in the hands of Karta Shivratan Motilal Rathi for F.Yrs. 2004-05, 2008-09, 2009-10 and 2011-12 came up for adjudication before this Tribunal in to 733/PUN/2016 and vide order dated 11.03.2019 the Tribunal has quashed the reopening proceedings by holding that the AO had no authority to reopen the assessment order u/s.147/148 since the basis for reopening is the report of DVO. This decision of the Tribunal dated 11.03.2019 has subsequently been followed by the ld.CIT(A) while deciding the appeal of the Karta and the assessee HUF for the A.Yrs. 2007-08 and 2010-11 and after quashing the reopening proceedings no appeal has been filed before this Tribunal. Since all these facts goes uncontroverted, we find that since the substantive additions itself have been deleted there remains no legs for the protective additions to stand for and therefore even the impugned penalties deserves to be deleted.
In view of the above, findings of the ld.CIT(A) for the assessment years under consideration are set-aside. The impugned penalties of Rs.87,715/- for the A.Y. 2007-08, 9,58,367/- for the A.Y. 2009-10 and Rs.5,33,928/- for the A.Y. 2010-11 are hereby deleted. Effective grounds of appeal raised by the assessee are allowed.
In the result, all the three appeals of the assessee are allowed.
Order pronounced on this 20th day of March, 2025.