DY CIT (IT)-4(2)(1), MUMBAI vs. M/S. GANPAT SINGHVI, MUMBAI

This is an appeal by the revenue challenging the order dated 31.01.2020 passed by learned Commissioner of Income Tax (Appeals)-58, Mumbai deleting the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2006-07.

Briefly the facts are, the assessee is a non-resident individual. The Assessing Officer (AO) received information from Government of France under bilateral exchange of information that the assessee is having account with HSBC Bank, Geneva. From the base note received, the Assessing AO found that the assessee is holder of two accounts in HSBC Bank having peak balance 2 Assessment Year: 2006-07 of US$ 11,84,652.72 in one account and US$ 9537 in another account. Based on such information, the AO reopened the assessment under section 147 of the Act. In response to the notice issued under section 148 of the Act, the assessee appeared and raised objections against the reopening of assessment proceedings. The assessee submitted that being a non–resident for more than 35 years, the provision of Income Tax Act could not be applicable. The Assessing Officer, however, did not find merit in the submissions of the assessee and ultimately completed the assessment under section 143(3) r.w.s. 147 of the Act, vide order dated 25.03.2015 determining the total income at Rs. 5,30,93,131/-. Against the assessment order so passed, assessee preferred appeal before learned Commissioner (Appeals). During the pendency of assessee’s appeal before First Appellate Authority, the AO initiated proceedings for imposition of penalty under section 271(1)(c) of the Act and ultimately passed an order on 31.08.2015 imposing penalty of Rs. 5,35,95,264/-, being 300% of tax sought to be evaded. Assessee challenged the imposition of penalty before learned Commissioner (Appeals). While considering assessee’s appeal against the imposition of penalty, learned Commissioner (Appeals) found that while deciding assessee’s quantum appeal, the First Appellate Authority has deleted the addition based on which penalty under section 271(1)(c) of the Act was imposed. That being the factual position, learned Commissioner (Appeals) deleted the penalty imposed under section 271(1)(c) of the Act. Being aggrieved, revenue is before us.

We have heard Shri Prabhat Kumar Gupta, learned Departmental Representative and Ms. Hema Kataria, learned Authorised Representative of 3 Assessment Year: 2006-07 the assessee. It is an agreed factual position before us that while deciding the appeal filed by the Revenue challenging the order of learned Commissioner (Appeals) deleting the substantive addition made by the AO in the assessment order, the Tribunal in dated 01.10.2021 has upheld the decision of learned Commissioner (Appeals). Thus, when the addition based on which penalty proceedings under section 271(1(c) of the Act was deleted by the appellate authorities, the penalty imposed under section 271(1)(c) of the Act cannot be sustained. Therefore, we do not find any infirmity in the decision of learned Commissioner (Appeals) in deleting the penalty imposed. Grounds raised