D- ART FURNITURE SYSTEMS PVT. LTD.,NEW DELHI vs. DCIT, CENTRAL CIRCLE- 17, NEW DELHI

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ITA 1354/DEL/2018Status: DisposedITAT Delhi16 May 2019AY 2008-095 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 held that when the basis for the assessment (additions) is removed, the penalty levied on those additions must also fall. Therefore, the penalty was deleted.

What were the facts?

The assessee's appeal was against a penalty levied under Section 271(1)(c) on additions made during assessment under Section 153A. The additions were later deleted by the Tribunal in a separate appeal.

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the additions on which it was levied have been deleted by the Tribunal.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 153A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, DELHI ‘B’ BENCH,

Before: SHRI N.K. BILLAIYA, & SHRI K.N. CHARY

For Appellant: Shri Vicky Kumar, Sr Accountant
Hearing: 14.05.2019Pronounced: 16.05.2019

PER N.K. BILLAIYA, ACCOUNTANT MEMBER,

1.

This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals] 27, New Delhi dated 10.01.2018 pertaining to assessment year 2008-09.

2.

The solitary grievance raised by the assessee is that the CIT(A) erred in upholding penalty levied u/s 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act'] on the additions made while framing the assessment order dated 12.03.2013 u/s 153A of the Act.

3.

The facts on record show that the assessment was completed on an income of Rs. 2,03,35,310/-. When the assessment was assailed before the CIT(A), the assessee could get only a relief of Rs. 31,320/- and the matter travelled upto the Tribunal. The Tribunal in vide order dated 06.02.2019 set aside the findings of the CIT(A) and deleted the addition by allowing the appeal of the assessee.

4.

The relevant part of the decision of the Tribunal [supra] reads as under:

“6.4. It is observed that Ld.AO made additions based upon audited balance sheet, filed during assessment proceedings. Hon’ble Delhi High Court in case of Pro.CIT vs. Ram Avtar

Verma, reported in (2017) 88 Taxmann.com 666, has held as under:

“4. The Revenue urges that the non-obstante clause in Section 153A together with Section 158BD removes the barrier vis-a- vis restriction upon search assessments being confined to "undisclosed income". In other words, it is stated that none of the provisions confine the enquiry of the AO to evaluating incriminating materials. This aspect, in the opinion of the Court, was extensively dealt with in Kabul Chawla v. CIT [2016] 380 ITR 573/[2015] 234 Taxman 300/61 taxmann.com 412 (Delhi) which has, by now, been followed consistently in several appeals. The non- obstante clause, in the opinion of the Court, was necessary, given that there is a departure from the preexisting provisions, which applied for the previous years and had a different structure where two sets of assessment orders were made by the AO during block periods. With the unification of assessment years for the block period, i.e. only one assessment order for each year in the block period, it was necessary for an overriding provision of the kind actually adopted in Section 153A. But for such a non-obstante clause, the Revenue could possibly have faced hurdles in regard to unadopted/current assessment years as well as reassessment proceedings pending at the time of the search in respect of which proceedings were to be completed under Sections 153A/ 153C. Having regard to the above directions, we are of the opinion that the ITAT decision does not call for interference. Both appeals are accordingly dismissed.” 6.5. Respectfully following the same, we allow ground no.1 raised by assessee.”

5.

When the foundation [assessment] is removed, the super structure [penalty] must fall.

6.

In the result, the appeal filed by the assessee in is allowed.

The order is pronounced in the open court on 16.05.2019.

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