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Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI
Before: SHRI V. DURGA RAO, HON’BLE & SHRI G. MANJUNATHA, HON’BLE
आदेश / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: These two appeals filed by the Revenue against two different assessees are directed against separate, but identical order of the Commissioner of Income Tax (Appeals)-2, Chennai, dated 28.11.2019 and pertains to assessment year 2014-15. & 350/Chny/2020 :: 2 ::
The Revenue has raised common grounds of appeal in both the cases and therefore, for the sake of brevity, the grounds of appeal in are reproduced as under:
1. The order of the learned CIT(A) is contrary to law, facts and circumstances of the case.
2. The learned CIT(A) erred in deleting the penalty u/s.271(1)(c) when further appeal is pending against the order of Hon'ble ITAT before the Hon'ble High Court?
3. The learned CIT(A) erred in not appreciating the decision of Hon'ble Supreme Court in dismissing the SLP in the case Suman Poddar Vs ITO in SLP (C) No. 26864/2019 dated 22/11/2019 and thereby upholding the order of Hon'ble Delhi High Court in the case of Suman Poddar Vs ITO in dated 17/9/2019 wherein it was held that the company had meager resources and astronomical growth of the value of the company's shares only excited the suspicion of the Revenue and hence, treated the receipts of the sale of shares to be bogus?
4. The learned CIT(A) erred in not appreciating the observation of Hon'ble Supreme Court in Civil Appeal No, 1969 of 2011 in the case of SEBI Vs. Rakhi Traders (P) Ltd (with Civil Appeal No.3174- 3177 of 2011 and Civil Appeal No.3180 of 2011) vide its order dated 08.02.18 wherein it was held: "considering the reversal transaction, quantum price and time and sale, parties being persistent in number of such huge transaction with huge price
variations, it will be too naive to hold that the transactions are through screen based trading and hence anonymous. Such conclusion would be overlooking the prior meeting of minds involving synchronization of buy and sell order and not negotiated deals as per the Board's Circular. The impugned transaction are manipulative/deceptive device to create desired loss and/as profit. Such synchronized trading is violative of transparent norms of trading insecurities....".
4. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored.
The brief facts extracted from are that assessment for the impugned assessment year had been completed u/s.143(3) of the Act and assessed the total income of the assessee at Rs.40,74,34,990/- by disallowing the claim of long term capital gains exempt u/s.10(38) of the Act, in respect of gain derived from sale of shares of M/s.Risa International Ltd., and made addition u/s.68 of the Act, as unexplained cash credit. Thereafter, penalty proceedings u/s.271(1)(c) of the Act, was initiated and the AO levied penalty of Rs.15,00,00,000/- u/s.271(1)(c) of the Act, for concealment of particulars of income. The & 350/Chny/2020 :: 3 ::
assessee went on appeal against the order of the Ld.CIT(A) and the Ld.CIT(A) vide his order dated 31.05.2017 uphold the additions made by the AO. The assessee carried the matter in further appeal before the Tribunal and the ITAT, Chennai, “C” Bench in dated 14.03.2018, deleted the additions made by the AO towards consideration received for sale of shares and assessed u/s.68 of the Act, as unexplained cash credit. The Ld.CIT(A) after considering the fact that the ITAT has deleted the additions made by the AO in quantum appeal proceedings has deleted the penalty levied by the AO u/s.271(1)(c) of the Act, by following the decision of the Hon’ble Supreme Court in the case of KC builders v. ACIT reported in [2004] 265 ITR 562 (SC). The relevant findings of the Ld.CIT(A) are as under:
4.1 The appellant went on appeal against the assessment made by the Assessing Officer before the CIT(A). The CIT(A) in its order dated 31.05.2017 upheld the additions made by the Assessing Officer. On further appeal by the appellant, the Chennai C Bench of the ITAT in its order in 1786/CHNY/2017 dated 14.03.2018 deleted the addition made in the course of the assessment proceedings and further directed the Assessing Officer to grant deduction u/s 10(38) by treating the gain arising out of the sale of shares as Long Term Capital Gains - as claimed by the appellant.
In view of the above, it is pertinent here to refer to the decision of the Hon’ble Supreme Court in the case of K.C Builders Vs ACIT (265 ITR 562) (SC) wherein it was declared as follows:
Where the additions made in the assessment order, on the basis of which penalty for concealment was levied, are deleted, there remains no basis of which penalty for concealment, and therefore, in such a case no such penalty can survive and the same is liable to be cancelled. Ordinarily, penalty cannot stand if the assessment itself is set aside. Where an order of assessment or re-assessment on the basis of which penalty has been levied on the appellant has itself been finally set aside or cancelled by the Tribunal or otherwise, the penalty cannot stand by itself and is liable to be cancelled.
Respectfully following the law as laid down by the apex Court in the case of K.C. Builders (supra), the penalty of Rs.15 Crores levied u/s 271(l)(c) by the Assessing Officer is cancelled. The appellant succeeds on this ground.
In the result the appeal is allowed. This Order is passed under Section 250 read with Section 251 of the Act.
& 350/Chny/2020 :: 4 ::
3.1 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. At the time of hearing, the Ld.DR and the Counsel for the assessee made statements at bar that the appeal filed by the Revenue on the issue of penalty u/s.271(1)(c) of the Act, needs to be dismissed, because the addition, on which, penalty levied by the AO u/s.271(1)(c) of the Act, has been deleted by the Tribunal in ITA No.1786/Chny/2017. We find that the Tribunal has deleted the additions made by the AO towards sale consideration received for sale of shares of M/s.Risa International Ltd., u/s.68 of the Act and thus, we are of the considered view that when the additions made in the assessment order on the basis of which penalty for concealment was levied, has been deleted, then remains no basis for levy of penalty u/s.271(1)(c) of the Act. The Ld.CIT(A) after considering the relevant facts and also by following the decision of the Hon’ble Supreme Court in the case of M/s.KC Builders (supra) has rightly deleted the penalty levied by the AO. Hence, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue.
In the result, the appeal filed by the Revenue in is dismissed.
5. The facts and issues involved in this appeal are identical to the facts and issues which we had already been considered in for the AY 2014-15 in the case of Mr.Sohanraj Praveenkumar. The reasons & 350/Chny/2020 :: 5 ::
given by us in the preceding paragraphs in shall equally apply to this appeal, as well. Therefore, for similar reasons, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue.
In the result, the appeal filed by the Revenue in is dismissed.
In the result, the appeals filed by the Revenue in & 350/Chny/2020 are dismissed.
Order pronounced on the 11th day of April, 2022, in Chennai.