ASSTT. CIT, CENTRAL CIRCLE-1(3), MUMBAI vs. M/S. POONAM SKYLINE CONSTRUCTION, MUMBAI

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ITA 1985/MUM/2020Status: DisposedITAT Mumbai06 October 2021AY 2013-144 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the additions on which the penalty was based were vacated by the Tribunal, the penalty could not survive independently. Therefore, the deletion of the penalty by the CIT(A) was upheld.

What were the facts?

The Assessing Officer (AO) made additions for bogus loans, interest, and commission. Subsequently, a penalty was levied under Section 271(1)(c). The Commissioner (Appeals) deleted the penalty, noting that the original additions had been vacated by the Tribunal.

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the underlying additions have been deleted by the Tribunal.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 143(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “C” MUMBAI

For Appellant: Shri Prateek Jain, A.R
For Respondent: Shri Shreekala Pardeshi, D.R
Hearing: 04/10/2021Pronounced: 06/10/2021

ORDER PER RAVISH SOOD, J.M: The present appeal filed by the revenue is directed against the order passed by the CIT(A)-47, Mumbai, dated 21.09.2020, which in turn arises from the order passed by the A.O u/s 271(1)(c) of the Income Tax Act, 1961 (for short „Act‟), dated 27.03.2019 for A.Y 2013-14. The revenue has assailed the impugned order on the following grounds before us:

“1. Whether o the facts and in the circumstances of the case and in law, the ld. CIT(A) was justified in deleting the penalty of Rs.1,16,66,532/- levied on account of Bogus loan and interest paid on bogus loans without appreciating the fact that the deletion of such quantum addition has not been accepted by the Department and an appeal is preferred to Hon‟ble High Court against deletion of such quantum addition which is pending for adjudication.”

2 ACIT, CC-1(3) Vs. M/s Poonam Skyline Construction

2.

Briefly stated, the assessee firm had filed its return of income for A.Y 2013- 14 on 20.09.2013, declaring a total income of Rs.4,90,990/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s 143(2) of the Act.

3.

Assessment was thereafter framed by the A.O vide his order passed u/s 143(3), dated 14.03.2016, wherein the income of the assessee was determined at Rs.3,48,14,421/- after making the following additions/disallowances:

Sr. No. Particulars Amount 1. Addition of bogus loans Rs.3,19,00,000/- 2. Addition of interest on bogus loans Rs. 20,05,631/- 3. Addition of commission paid on bogus loans Rs. 3,17,800/- Thereafter, the A.O vide his order passed u/s 271(1)(c) r.w.s 274, dated 27.03.2019 imposed a penalty of Rs.1,16,66,532/- on the assessee firm.

4.

Aggrieved, the assessee assailed the impugned order passed by the A.O u/s 271(1)(c), dated 27.03.2019 before the CIT(A). Observing that the additions that were made by the A.O had been vacated by the Tribunal, the CIT(A) deleted the penalty imposed by the A.O u/s 271(1)(c) of the Act and allowed the appeal.

5.

The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. It was submitted by the ld. A.R that as the additions made by the A.O had been vacated by the Tribunal vide its order passed in dated 03.05.2019, therefore, the CIT(A) had rightly quashed the penalty imposed by the A.O u/s 271(1)(c) of the Act.

6.

Per contra, the ld. Departmental Representative (for short „D.R‟) relied on the order passed by the A.O u/s 271(1)(c) of the Act. It was submitted by the ld. D.R that the order passed by the Tribunal in the quantum appeal of the assessee had not been accepted by the department and have been assailed before the Hon‟ble High Court. However, the ld. D.R could not rebut the aforesaid claim of 3 ACIT, CC-1(3) Vs. M/s Poonam Skyline Construction the counsel for the assessee that the impugned additions as regards which penalty was imposed u/s 271(1)(c) had been vacated by the Tribunal.

7.

We have heard the ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record. As stated by the ld. A.R, and rightly so, now when the impugned additions qua which the penalty had thereafter been imposed by the A.O u/s 271(1)(c) of the Act had been vacated by the Tribunal, therefore, penalty imposed by the A.O u/s 271(1)(c) cannot survive on a standalone basis and has to meet the same fate. On a perusal of the order of the CIT(A), we find that he had after taking cognizance of the fact that the impugned additions had been vacated by the Tribunal, therein, vacated the penalty imposed by the A.O u/s 271(1)(c) of the Act, observing as under:

“6.1 I have gone through the submission, order of Hon‟ble ITAT and facts on record. It is clear that the addition/disallowance in respect of unsecured loans, interest and commission has been duly deleted by the ITAT. The relevant pat of the order is already reproduced in the above submission. Therefore, once the quantum additions has been deleted, the penalty doesn‟t stands.”

As observed by us hereinabove, now when the impugned additions on the basis of which the penalty had been imposed by the A.O u/s 271(1)(c) had been deleted by the Tribunal, therefore, the consequential penalty that was imposed by the A.O u/s 271(1)(c) of the Act had rightly been vacated by the CIT(A). We, thus, finding no infirmity in the view taken by the CIT(A) uphold his order.

8.

Resultantly, the appeal filed by the revenue is dismissed.

Order pronounced in the open court on 06.10.2021

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