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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI S. RIFAUR RAHMAN & SHRI RAVISH SOOD
The aforesaid appeal has been filed by the assessee challenging the penalty order dated 31st July 2018, passed by the learned Commissioner of Income Tax (Appeals)–3, Mumbai, confirming penalty of ` 1,11,363, imposed under section 271(1)(c) of the Income Tax Act, 1961 (for short "the Act") on account of enhancement of ` 3,43,236, made on account of undervaluation of investment in securities by the learned Commissioner (Appeals)–3, Mumbai, for the A.Y. 20012–13.
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During the course of hearing, the learned Counsel for the assessee respectfully placed before us a copy of an order dated 29th January 2020, passed in ITA no.3739/Mum./2018, by a Co–ordinate Bench of this Tribunal, Mumbai Bench, in assessee’s own case for the assessment year 2012–13, wherein, vide ground no.3, the assessee had raised the quantum issue which relates to disallowance made on account of shifting of securities from investments held under “Available For Sale” to HTM category resulting enhancement in securities worth ` 3,43,236. In this regard, the leaned Counsel for the assessee submitted that the Tribunal, vide aforesaid order, has deleted the enhancement in securities of ` 3,43,236. Relevant portion of the order cited supra as contained in Para–6.3, is reproduced below:–
“6.3 We find that in the instant case, the depreciation of investments at the time of shifting from AFS to HTM category had been debited by the assessee as an expenditure in consonance with RBI Circular dated 01/07/2011 referred to supra. The said shifting loss is squarely allowable as deduction. But the assessee had provided the revised workings of the said loss before the Id. CIT(A) which resulted in an enhancement of Rs 3,42,336/-. We find that the assessee had not provided any evidence before us to counter the said workings given before the Id. CIT(A) and hence we do not deem it fit to interfere in the said enhancement done by the Id. CIT(A) . However, the observations made by the Id. CIT(A) for justifying the addition is not warranted. Accordingly, the ground no.8 of the revenue is dismissed and ground no.3, of the assessee is dismissed subject to removal of remarks by the ld. CIT(A) as observed herein above.” [Emphasis Supplied]
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2. Therefore, the leaned Counsel for the assessee prayed before us that the penalty so imposed by the learned Commissioner (Appeals) needs to be deleted.
The learned Departmental Representative on the other hand fairly accepted the submissions of the leaned Counsel for the assessee.
Considered the rival submissions and perused the material placed on record. We find that the impugned penalty order passed under section 271(1)(c) of the Act by the learned Commissioner (Appeals) was on the basis of quantum addition made by the Revenue resulting enhancement in securities worth ` 3,43,236. The assessee being aggrieved by this order, filed appeal before the Tribunal being ITA no.3739/Mum./2018, wherein the Tribunal, vide order dated 29th January 2020, has deleted the quantum addition made by the learned Commissioner (Appeals). As a result of enhancement in securities, the penalty was imposed under section 271(1)(c) of the Act. Since the quantum addition is deleted by the Tribunal, consequently, the penalty imposed under section 271(1)(c) of the Act becomes infructuous and has no legs to stand. With these observations, we set aside the impugned penalty order passed by the learned Commissioner (Appeals) and allow the grounds of appeal raised by the assessee.
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In the result, appeal is allowed. Order pronounced open court on 5.03.2021