DCIT, CIRCLE-1(1)(1), AHMEDABAD, AHMEDABAD vs. APRAAVA RENEWABLE ENERGY PVT LTD, AHMEDABAD

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ITA 1975/AHD/2024Status: DisposedITAT Ahmedabad23 April 2025AY 2015-16Bench: SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER\n& SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER\nI.T.A. No.1975/Ahd/2024\n(Assessment Year: 2015-16)\nDeputy Commissioner of\nIncome Tax,\nCircle-1(1)(1),\nAhmedabad\nVs.\nApraava Renewable Energy\nPvt. Ltd.,\n7th Floor, Fulcrum, Sahar Road,\nAndheri (East), Sahargaon\nB.O., Sahar P&T Colony, S.O.\nMumbai-400099\n[PAN No.AADCC4393G]\n(Appellant)\n(Respondent)\nAppellant by :\nShri Prathvi Raj Meena, CIT D.R.\nRespondent by:\nShri Dhrunal Bhatt, Shr3 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 it is a well-settled legal principle that if the quantum additions, which formed the basis for imposing penalty under Section 271(1)(c) of the Act, are deleted, then the penalty itself is liable to be deleted. This is because the very foundation for the penalty imposition has been nullified. The Tribunal found no infirmity in the order of the Ld. CIT(A) who had deleted the penalty on the ground that the ITAT had already deleted the underlying quantum additions. Therefore, the Tribunal upheld the deletion of the penalty. The appeal filed by the Department was dismissed.

What were the facts?

The appeal is filed by the Deputy Commissioner of Income Tax (Appellant) against the order of the Commissioner of Income Tax (Appeals) - NFAC, Delhi, dated 03.09.2024, for Assessment Year 2015-16. The assessee, Apraava Renewable Energy Pvt. Ltd., is engaged in power generation. The Assessing Officer (AO) made a disallowance of Rs.43,58,80,000/- on account of forward cover premium under Section 37 of the Income Tax Act, 1961. Subsequently, the AO initiated penalty proceedings under Section 271(1)(c) and levied a penalty of Rs.14,81,55,612/-. The Ld. CIT(A) deleted this penalty. The Department's appeal to the ITAT challenges this deletion.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the penalty levied of Rs.14,81,55,612/- under Section 271(1)(c) of the Act, without appreciating that the assessee furnished inaccurate particulars? Assessee's Contention: The assessee argued that the ITAT Ahmedabad, in its order dated 31.08.2022 (in ITA Nos. 1110/Ahd/2018 and 1605 & 1606/Ahd/2019), had deleted the quantum additions of Rs.43,58,80,000/- made on account of forward cover premium. Therefore, since the basis for the penalty (the quantum addition) was removed, the consequent penalty under Section 271(1)(c) was not maintainable and should be deleted. The assessee provided a copy of the ITAT's order to the Ld. CIT(A). Revenue's Contention: The grounds of appeal filed by the Department indicate that they contend the Ld. CIT(A) failed to appreciate that the assessee furnished inaccurate particulars, implying the penalty was justified.

Which sections of the Income-tax Act were involved?

Section 37,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: SHRI SIDDHARTHA NAUTIYAL & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Prathvi Raj Meena, CIT D.R
For Respondent: Shri Dhrunal Bhatt & Shri Gulab Thakor, A.Rs
Hearing: 27.03.2025Pronounced: 23.04.2025

(Assessment Year: 2015-16) Deputy Commissioner of Vs. Apraava Renewable Energy Income Tax, Pvt. Ltd., 7th Floor, Fulcrum, Sahar Road, Circle-1(1)(1), Ahmedabad Andheri (East), Sahargaon B.O., Sahar P&T Colony, S.O. Mumbai-400099 [PAN No.AADCC4393G] (Appellant) .. (Respondent) Appellant by : Shri Prathvi Raj Meena, CIT D.R. Respondent by: Shri Dhrunal Bhatt & Shri Gulab Thakor, A.Rs. 27.03.2025 Date of Hearing Date of Pronouncement 23.04.2025 O R D E R

PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:

1.

This appeal has been filed by the Department against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 03.09.2024 passed for A.Y. 2015-16.

The Department has taken the following grounds of appeal:- 2.

1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the penalty levied of Rs. 14,81,55,612/- @ 100% of the tax sought to be evaded u/s 271(1)(c) of the Act, without appreciating the fact that the assessee furnished inaccurate particulars? 2. The appellant craves leave to amend or alter any ground or add a new grounds, which may be necessary.

DCIT vs. Apravva Renewable Energy Pvt. Ltd. Asst. Year –2015-16 - 2– 3. The brief facts of the case are that the assessee is a private limited company engaged in the business of generation of power. During the course of assessment, the Assessing Officer made a disallowance of expenditure of forward cover premium of Rs. 43,58,80,000/- by invoking the provisions of Section 37 of the Act. The Assessing Officer also initiated penalty proceedings under Section 271(1)(c) of the Act for furnishing of inaccurate particulars. The disallowance made by the Assessing Officer under Section 37 of the Act was confirmed by Ld. CIT(A) vide order dated 27.08.2019. Subsequently, the Assessing Officer levied penalty under Section 271(1)(c) of the Act on the assessee for a sum of Rs. 14,81,55,612/- @ 100% of the tax sought to be evaded.

4.

In appeal, before Ld. CIT(A), the assessee submitted that the ITAT Ahmedabad in and ITA No.2. 1605 & 1606/Ahd/2019 vide order dated 31.08.2022 has allowed the appeal of the assessee on this issue and the quantum additions on account of forward cover premium of Rs. 43,58,80,000/- have been deleted by ITAT. The assessee also submitted the copy of order of ITAT before Ld. CIT(A) for his perusal. Accordingly, the assessee submitted before Ld. CIT(A) that when the quantum additions have been deleted by ITAT, Ahmedabad, then the consequent penalty cannot be levied under Section 271(1)(c) of the Act and the same is liable to be deleted.

5.

In light of the above submissions, Ld. CIT(A) deleted the additions in the hands of the assessee with the following observations:

5. The appellant has submitted the copy of the Hon’ble ITAT’s order and stated that this issue has been decided in favour of the appellant by the Hon’ble ITAT. As the ITAT has allowed DCIT vs. Apravva Renewable Energy Pvt. Ltd. Asst. Year –2015-16 - 3– the appeal of the appellant, the penalty levied u/s 271(1)(c) of the IT Act by the AO on the disallowance of expenditure made u/s 37(1) of the IT Act is not maintainable. Hence, the AO is directed to delete the penalty levied u/s 271(1)(c) of the IT Act. The grounds taken are allowed. As a result, the appeal is allowed.

6.

The Department is in appeal before us against the aforesaid order passed by Ld. CIT(A), deleting the penalty levied by the Assessing Officer under Section 271(1)(c) of the Act.

7.

On going through the facts of the instant case, we observe that it is a well settled law that once the quantum additions have been deleted on the basis of which penalty had been imposed under Section 271(1)(c) of the Act, then penalty is also liable to be deleted, since the very basis of imposition of penalty has been vacated.

8.

Accordingly, we find no infirmity in the order of Ld. CIT(A), so as to call for any interference.

In the result, the appeal of the Department is dismissed. 9. This Order is pronounced in the Open Court on 23/04/2025

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