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

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ITA 184/DEL/2017Status: DisposedITAT Delhi03 September 2019AY 2010-113 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal had previously deleted the quantum addition made by the AO. Since the basis for the penalty (the quantum addition) was removed, the penalty cannot be sustained.

What were the facts?

The assessee filed a return showing a loss, but the AO made disallowances. The CIT(A) dismissed the appeal and enhanced the expenses, also initiating penalty proceedings.

What were the issues?

The primary issue was the sustainability of the penalty levied when the underlying quantum addition was deleted by the Tribunal.

Which sections of the Income-tax Act were involved?

Section 40A(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘C’NEW DELHI

Before: SHRI PRASHANT MAHARISHI & SHRI K. NARASIMHA CHARY

For Appellant: Shri V. Raj Kumar, Advocate
For Respondent: Ms. Rinku Singh, Sr. DR
Hearing: 20/08/2019

order : 03/09/2019 ORDER PER K. NARASIMHA CHARY, J.M. Aggrieved by the order dated 23.09.2016 passed by the Commissioner of Income-tax (Appeals)-6{CIT(A)}, New Delhi in Appeal No.187/13-14 for the Asstt. Year 2010-11, assessee preferred this appeal.

2.

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.

3.

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.

4.

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.

5.

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

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