Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “A’’BENCH: BANGALORE
Before: SHRI B. R. BASKARAN & SMT. BEENA PILLAI
against common order dated 27.9.2019 passed by Ld. CIT(A)-7, Bangalore and they relate to the assessment years 2005-06 to 2011-12. The revenue is aggrieved with the decision of Ld. CIT(A) in deleting the penalty levied u/s 271(1)(c) of the Income-tax Act,1961 ['the Act' for short]. to 2403/Bang/2019 M/s. Pratibha Jewllery House, Bangalore
We heard the parties and perused the records. The assessee is engaged in the business of dealing in jewellery and bullion. A search u/s 132 of the Act was conducted in the hands of the assessee on 2.9.2010. Consequent thereto, the assessments for the years under consideration were completed by the A.O. u/s 143(3) r.w.s. 153A of the Act making additions on the following heads:
a) Addition on account of revaluation of closing stock. b) Addition of gross profits made outside the books. c) Excess stock found at the time of search. The additions mentioned in (a) & (b) were made in all the 7 years and the addition mentioned in (c) was made in assessment year 2011-12 only. Subsequent to passing of assessment order, the A.O. levied a penalty u/s 271(1)(c) of the Act as mentioned below.
Asst. Year Total addition made Penalty u/s 271(1)(c) for the year 2005-06 3,07,29,716 1,12,54,773 2006-07 2,87,19,395 96,66,947 2007-08 4,59,83,515 1,54,78,043 2008-09 2,67,00,192 89,84,790 2009-10 4,67,41,925 1,60,99,318 to 2403/Bang/2019 M/s. Pratibha Jewllery House, Bangalore
Page 3 of 7 2010-11 5,28,24,006 1,63,22,619 2011-12 9,80,82,782 3,03,07,580 Total 32,97,81,531 10,81,14,070
The assessee challenged the penalty levied by the A.O. by filing appeals before Ld. CIT(A). In the meantime, the quantum appeals pertaining to all the 7 years came to be decided by the coordinate bench of ITAT, which deleted all the additions, vide its order passed on 17.8.2008 in to 2539/Bang/2017 for assessment years 2005-06 to 2010-11 and also by the order passed on 21.8.2018 in ITA No.585/Bang/2014 for assessment year 2011-12. Accordingly, the assessee submitted before Ld. CIT(A) that the additions on which the impugned penalty was levied by the A.O. has since been deleted by the ITAT and hence the impugned penalty levied in all the 7 years are liable to be deleted.
Convinced with the submissions made by the assessee, the Ld. CIT(A) deleted the penalties levied in all the 7 years with the following observations: to 2403/Bang/2019 M/s. Pratibha Jewllery House, Bangalore
Page 4 of 7 “4.2 The appellant has filed grounds of appeal challenging the penalty orders both on technical ground and on merit. The appellant has filed detailed submission in support of its grounds of appeal. The appellant also submitted that since the Hon’ble ITAT has deleted all the quantum additions for all these years on the basis of which penalty u/s 271(1)(c) were imposed, the penalty orders are not sustained at this stage. The appellant has submitted on this point as under: “6.1 It is submitted that the additions made by the Learned A.O. in the assessment proceedings have since been deleted by the Hon’ble ITAT in the appellate orders passed in to 2539/Bang/2017 dated 17.8.2018 (Annexure-6), for the assessment years 2005-06 to 2010-11 & by the order in ITA No.585/Bang/2014 dated 21.8.2018 (Annexure- 7), for the A.Y. 2011-12. Thus, as a result of these appellate orders there are no additions or variations to the income returned by the appellant in these proceedings.
6.2 In as much as the additions made in the assessment based on which penalty have been imposed are themselves deleted in appeal, no penalty u/s 271(1)(c) of the Act, can either be imposed or sustained at this stage and the same deserve to be cancelled. It is prayed accordingly.”
4.3 The submissions of the appellant have been considered. It is found that the quantum additions for all these years on the basis of which penalty u/s 271(1)(c) were imposed by the A.O. have been deleted vide order of ITAT, Bangalore. Under these facts and circumstances, the contention of the appellant that the penalty orders u/s 271(1)(c) do not survive, do have merit. In the case of Babul Harivadan Parikh 37 taxmann.com 52 the Hon’ble Gujarat HC has held that when quantum additions are deleted by the ITAT, the penalty will not survive. The Hon’ble Punjab and Haryana HC in the case Smt. Bharto Devi 11 taxmann.com 259 has held that since in quantum proceedings issue had become final in favour of assessee, appeal against imposition of penalty was to be dismissed. to 2403/Bang/2019 M/s. Pratibha Jewllery House, Bangalore
Page 5 of 7 4.4. In view of above, it is held that the penalty orders passed by the A.O. for all these years imposing penalty u/s 271(1)(c) cannot be sustained since the quantum additions for which these penalty u/s 271(1)(c) have been imposed, are already deleted by the order of jurisdictional ITAT. Since, penalties are held to be non sustainable on above account, other contentions raised by the appellant in grounds of appeal are not adjudicated.”
5. The revenue is aggrieved by the decision of Ld. CIT(A). The Ld. D.R. submitted that the revenue has challenged the decisions rendered by ITAT by filing appeals before Hon’ble High Court of Karnataka.
Accordingly he submitted that the issues have not attained finality and hence the Ld CIT(A) should not have deleted the penalties.
On the contrary, the Ld. A.R. submitted that the impugned penalties are liable to be deleted since the additions made in the assessment order in all the seven years have since been deleted by the ITAT. Hence the Ld. CIT(A) was justified in deleting the penalties levied u/s 271(1)(c) of the Act in all the seven years. Accordingly, he to 2403/Bang/2019 M/s. Pratibha Jewllery House, Bangalore
Page 6 of 7 submitted that the decision rendered by Ld. CIT(A) does not call for any interference.
We have noticed that the Ld. CIT(A) has deleted the penalties on the reasoning that the additions, on which the penalties were levied, have since been deleted by the ITAT. We notice that the Ld. CIT(A) has placed reliance on the decision rendered by Hon’ble Gujarat High Court in the case of Babul Harivadan Parikh (supra) and by Hon’ble Punjab & Haryana High Court in the case of Smt.
Bharto Devi (supra) in support of his decision. Though the Ld D.R contended that the Ld CIT(A) should not have deleted the penalty, yet he could not furnish any decisions contrary to the decisions relied upon by Ld CIT(A). Hence, we do not find any infirmity in the decision rendered by Ld. CIT(A) in deleting the penalty levied u/s 271(1)(c) of the Act in all the years under consideration. to 2403/Bang/2019 M/s. Pratibha Jewllery House, Bangalore
Page 7 of 7 8. In the result, all the appeals of the revenue are dismissed.
Order pronounced in the open court on 26.06.2020.