DCIT, CHENNAI vs. CHETTINAD HOSPITALS P LTD., CHENNAI

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ITA 591/CHNY/2019Status: DisposedITAT Chennai07 September 2021AY 2009-104 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 if the additions on which penalty was levied are deleted by the appellate authority, then the penalty cannot survive. Therefore, the CIT(A) was correct in deleting the penalty.

What were the facts?

The Assessing Officer levied penalty under Section 271(1)(c) for concealment of income. The assessee had challenged the additions made by the AO, which were deleted by the ITAT. The CIT(A) then deleted the penalty, holding that it cannot survive if the underlying additions are deleted.

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the additions on which it was levied have been deleted by the appellate authority.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 37,Section 12AA,Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI V.DURGA RAO & SHRI G.MANJUNATHA

Hearing: 07.09.2021

against common order passed by the learned CIT(A)-1, Chennai dated 31.12.2018 and pertains to assessment years 2008-09, 2009-10 and 2010-11. Since, the facts are identical and issues are common, for the sake of convenience, these appeals are heard together and are being disposed off, by this consolidated order.

2.

The Revenue has more or less raised common grounds of appeal for these assessment years, therefore, for the sake of brevity, grounds of appeal filed for the assessment year 2008-09 are reproduced as under:-

“1. The order of the Ld. CIT(A) is contrary to law, facts and circumstances, of the case.

2. The Ld.CIT(A) erred in giving relief to the assessee by deleting the penalty under section 271(l)(c) of the Act when the quantum issue is still pending adjudication by the Hon’ble High Court.

3. The Ld.CIT(A) erred in giving relief to the assessee in the present case of penalty when in the quantum appeal itself the business loss claimed by assessee was found to be not genuine by the AO, as the remuneration for services rendered was not as per the market price & the loss incurred as a result of the scheme of arrangement between the assessee and its associate concern by which the expenses of the associate concern (A trust registered u/s. 12AA) were booked in the assessee’s accounts against a paltry sum received from the associate concern as management fees thereby violating the provisions of Sec.37 of the l.T. Act.”

3.

Brief facts of the case are that assessment for impugned assessment years has been completed u/s.143(3) r.w.s.147 of the Income Tax Act, 1961. The assessee has challenged assessment order before the Tribunal. The ITAT., Chennai Benches vide its order dated 01.06.2016 in to 3070/Mds/2014 has deleted additions made by the Assessing Officer. In the meantime, the Assessing Officer has levied penalty u/s.271(1)(c) of the Income Tax Act, 1961 and levied penalty for concealment of particulars of income for all three assessment years. The assessee has challenged penalty order passed by the Assessing Officer before the CIT(A) and learned CIT(A) vide order dated 31.12.2018 deleted penalty levied by the Assessing Officer by considering fact that the ITAT has deleted additions made by the Assessing Officer in assessment proceedings. Aggrieved by the learned CIT(A) order, the Revenue is in appeal before us.

4.

The learned DR submitted that the learned CIT(A) has erred in deleting penalty u/s.271(1)(c) of the Act, when quantum issue is still pending for adjudication by the Hon’ble High Court.

5.

The learned A.R for the assessee, on the other hand, submitted that when addition was deleted, then penalty levied on such addition cannot survive under the law. Therefore, there is no error in the order passed by the learned CIT(A) to delete penalty levied by the Assessing Officer u/s.271(1)(c) of the Act.

6.

We have heard both the parties, perused material available on record and gone through orders of the authorities below. We find that the Tribunal in to 3070/Mds/2014 dated 01.06.2016 has deleted additions made by the Assessing Officer for all three assessment years. Once addition on which penalty has been levied u/s.271(1)(c) of the Act, itself was deleted by the appellate authority, then penalty levied on such addition cannot survive under law. The learned CIT(A), after considering relevant facts has rightly deleted penalty levied by the Assessing Officer u/s.271(1)(c) of the Act.

There is no error in the order of learned CIT(A) and hence, we are inclined to uphold findings of the learned CIT(A) and dismiss appeals filed by the revenue for all three assessment years.

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