M/S. NANDA MINT & PINE CHEMICALS LTD.,NEW DELHI vs. DCIT, NEW DELHI

For the Asstt. Year 2010-11, assessee filed return of income showing a loss of Rs.36,03,952/- and the AO made certain disallowances u/s 40A(3) and also on account of additional sales-tax demand besides some administrative expenses and concluded the assessment at a loss of Rs.6,11,550/-. Assessee filed appeal against the quantum addition and by order dated 11.4.2016, the ld. AO not only dismissed the appeal but enhanced the expenses made by the AO byRs.7,17,540/-. He simultaneously initiated penalty proceedings and concluded them by order dated 29.3.2016 with the levy of penalty at 100% tax on the enhanced amount. Hence, this appeal by the assessee against the order of ld. CIT(A) levying the penalty.

At the outset, it is brought to our notice that the Tribunal in assessee’s appeal against the quantum addition in by order dated 19.8.2019 deleted the quantum addition and thereby rendering penalty unsustainable.

A copy of the order dated 19.8.2019 is produced and we have gone through the same. Vide para 9, the Tribunal gave a categorical finding that the assessee had to maintain the plant and machinery in running condition even though no sale takes place by incurring some expenses and, therefore, the quantum addition has to be deleted. Since the quantum addition is deleted, penalty cannot be sustained. We, therefore, allow the appeal of the assessee.

In the result, appeal of the assessee is allowed. Pronounced in open court on 3rd September, 2019.