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Facts
The assessee filed a return of income, which was selected for scrutiny. The AO disallowed a claim under Section 54F and imposed a penalty under Section 270A. The CIT(A) initially dismissed the appeal due to delay but later condoned it for the quantum addition, deleting it.
Held
The Tribunal held that since the addition on which the penalty was computed was deleted by the CIT(A), there was no foundation for the penalty. The penalty was thus deemed unsustainable.
Key Issues
Whether a penalty under Section 270A can be sustained when the underlying addition has been deleted by the appellate authority.
Sections Cited
270A, 143(3), 54F
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Income Tax Appellate Tribunal, CHANDIGRH BENCH, ‘SMC’ CHANDIGARH
Before: SHRI RAJPAL YADAV
PHYSICAL HEARING O R D E R The assessee is in appeal before the Tribunal against the order of ld. CIT(Appeals) dated 28.05.2024 passed for assessment year 2018-19. The solitary grievance of the assessee is that ld. CIT(A) has erred in confirming the penalty imposed by the AO under Section 270A of the Income Tax Act.
The brief facts of the case are that assessee has filed her return of income declaring income of Rs.95,530/-. The case of the assessee was selected for scrutiny assessment and A.Y.2018-19 2 assessment order was passed on 09.04.2019 under Section 143(3) of the Income Tax Act. The ld. AO has disallowed the claim of assessee under Section 54F amounting to Rs.28,92,978/-. The AO has initiated a penalty under Section 270A of the Act. He imposed penalty of Rs.2,87,066/- being 50% of the tax on under reported income.
The appeal to the ld. CIT(A) did not bring any relief to the assessee because it was dismissed for the reason that there is a delay in filing the appeal.
The ld. Counsel for the assessee, at the very outset submitted that the alleged quantum addition has been deleted by the CIT(A) vide her order dated 21.04.2024, hence, there are no legs to stand for this penalty. He further submitted that against the assessment order, appeal was instituted on 20.11.2023. The penalty was imposed on 05.05.2022 and this appeal was also instituted on 15.12.2023. In other words, both the appeals were instituted simultaneously but the ld. CIT(A) on quantum side condoned the delay in filing the appeal, if any and decided it on merits. On the other hand, the ld. CIT(A) in penalty proceedings A.Y.2018-19 3 did not condone the delay of 709 days and confirmed the levy of penalty.
On due consideration of the above facts and circumstances and looking to the order of the CIT(A) in quantum proceeding, I am satisfied that assessee does not deserves to be visited with penalty because there is no foundation for calculating the penalty, the additions on which penalty has been computed stands deleted. In other words, there cannot be any charge that assessee has under reported the income because addition on alleged under reported income has already been deleted and attained finality. Therefore, I condone the delay in filing the appeal before the CIT(A) and entertain the issue on merit.
In view of the quantum order of the CIT(A), the penalty is not sustainable, hence deleted.
In the result, the appeal of the assessee is allowed.