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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI
Before: SHRI R.K.PANDA & MS. SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, J.M. These appeals are filed by the assessee against the order dated 26.09.2016 passed by the Commissioner of Income Tax (Appeals)- 31, New Delhi.
Grounds of appeal
are as under : (A.Y. 2010-11)
1. That on the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) -31, New Delhi (CIT (A) for short) erred in confirming the penalty of Rs. 10,91,06,410/- imposed by the Deputy Commissioner of Income Tax, Central Circle - 29, New Delhi (AO for short) u/s 271(1 )(c) of the Income Tax Act, 1961 (hereinafter called the Act for short) without appreciating that i) The penalty was imposed by the AO without application of mind as would be evident from paras 7 & 8 of the AO's order u/s 271(l)(c) of the Act, and ii) Without dealing with the submissions of the appellant dated 26.11.2015 in response to notice dated 17.11.2015 issued by the AO asking the appellant to show cause why penalty u/s 271(l)(c) of the Act be not imposed.
2. That on the facts and in the circumstances of the case, the learned CIT(A) was not justified in confirming the penalty of Rs. 10,91,06,410/- levied under the provisions of Section 271(l)(c) of the Act.
That the appellant craves liberty to add, alter, vary or amendanyground of appeal.”
ITANo.6094/Del/2016 (A.Y.2011-12)
“1. That on the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) - 31, New Delhi (CIT (A) for short) erred in confirming the penalty of Rs. 3,78,455/- imposed by the Deputy Commissioner of Income Tax, Central Circle - 29, New Delhi (AO for short) u/s 271(l)(c) of the Income Tax Act, 1961 (hereinafter called the Act for short) without appreciating that i) The penalty was imposed by the AO without application of mind as would be evident from paras 6 &7 of the AO's order u/s 271(l)(c) of the Act, and ii) Without dealing with the submissions of the appellant dated 26.11.2015 in response to notice dated 17.11.2015 issued by the AO asking the appellant to show cause why penalty u/s 271(l)(c) of the Act be not imposed.
2. That on the facts and in the circumstances of the case, the learned CIT(A) was not justified in confirming the penalty of Rs. 3,78,455/- levied under the provisions of Section 271(l)(c) of the Act.
That the appellant craves liberty to add, alter, vary or amend any ground of appeal.”
3. The assessee is a company engaged in the manufacturing of flavoured Chewing Tobacco and Kiwam under the brand name “BABA”. The Assessee filed return of income for the Assessment Year 2010-11 on 16.01.2012 showing a total loss of Rs. (-) 40,84,49,906/- and for the Assessment Year 2011-12 was filed on 30.09.2011 showing the total loss of Rs. (-) 5,07,06,954/-. These cases were selected for scrutiny and notices u/s 143(2) of the Act were issued and served. For the Assessment Year 2011-12, assessment was completed u/s 143(3) vide order dated 28.03.2013 at a loss of Rs. (-) 5,07,06,954/- making an addition of Rs. 12,24,775/- on the count of disallowance u/s 14A of the Act. For the Assessment Year 2010-11 the Assessing Officer passed order dated 28.03.2013 determining a loss of Rs. (-) 8,65,32,934/- thereby making an addition of Rs. 31,96,23,143/- on account of disallowances of depreciation and that of Rs. 13,72,475/- u/s 14A.
4. The penalty proceedings u/s 271(1)(c) of the Act were initiated in respect of the above said additions. The said proceedings were completed after giving opportunity to the assessee and after considering its submission, the penalty orders were passed on 04.03.2016 levying a penalty of Rs. 10,91,04,410/- and that of Rs. 3,78,455/- for the Assessment Years 2010-11 and 2011-12 respectively.
Being aggrieved by the assessment orders the assessee filed appeals before the CIT(A). The CIT(A) dismissed the appeals of the assessee.
The Ld. AR submitted that in the quantum appeal for assessment year 2010-11 the additions were deleted by the Tribunal vide order dated 30.11.2017 being and 260/Del/2015. As regards assessment year 2011-12 by the said order passed by the Tribunal addition in respect of depreciation has been remanded back to the file of the assessing officer and second additions relating to 14A was allowed in favour of the assessee. Since the quantum appeal has decided the very effect of the penalty, therefore, the penalty does not sustain hence, both the appeals filed by the assessee be allowed.
The Ld. DR relied upon the Assessment Order, Penalty order and the order of the CIT(A).
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the quantum appeals in both the Assessment Years have been decided by the Tribunal and one issue is remanded back to the file of the Assessing Officer. Since the very basis of the penalty has been allowed in favour of the assessee and set aside by the Tribunal, these two appeals do not survive. Hence, both the appeals of the assessee are allowed.