M/S. AGACHE ASSOCIATES LIMITED,NEW DELHI vs. ITO, NEW DELHI

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ITA 2251/DEL/2016Status: DisposedITAT Delhi15 February 2019AY 2008-093 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 since the basis for levying the penalty has been set aside, the penalty order cannot stand. Therefore, the penalty levied by the Assessing Officer and sustained by the CIT(A) is liable to be cancelled.

What were the facts?

The Assessing Officer made significant additions to the assessee's returned income, leading to a penalty of Rs. 6 lacs under Section 271(1)(c). The CIT(A) upheld this penalty. However, the Tribunal had previously set aside the quantum appeal for the assessment year to the Assessing Officer for fresh adjudication.

What were the issues?

Whether the penalty under Section 271(1)(c) is sustainable when the underlying additions forming the basis of the penalty have been set aside for fresh adjudication.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3)

AI-generated summary — verify with the full judgment below

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

Before: SH. R.K PANDA & MS. SUCHITRA KAMBLE

Hearing: 12/02/2019Pronounced: 15/02/2019

This appeal filed by the assessee is directed against the 1. order dated 05.01.2016 of the CIT(A)-I, New Delhi relating to A. Y. 2008-09.

2.

Levy of penalty of Rs.6 lacs by the Assessing Officer u/s 271 (1) (c ) of the Act which has been upheld by the CIT(A) is the only issue raised by the assessee in the grounds of appeal.

3.

The Ld. Counsel for the assesee at the outset submitted that as against returned income of Rs.35,580/- the Assessing officer completed the assessment u/s 143 (3) (iii) of the Act on 26.11.2010 determining the total income of Rs.18,98,109/-. In appeal the Ld. CIT (A) confirmed the various additions made by the Assessing officer. Subsequently the assessing officer initiated the penalty proceedings u/s 271 (1) (c) of the IT Act and levied penalty of Rs. 6 lacs u/s 271 (1) (c) of the IT Act. Referring to the copy of the order of the Tribunal dated 17.08.2017, the Ld. counsel for the assessee submitted that the Tribunal in the quantum appeal for assessment years 2005-06, 2008-09 and 2011-12 in 2232/Del/2014 and 4376/Del/2014 has restored the issue back to the file of the Assessing Officer for fresh adjudication. Since the very basis on which penalty was levied has been set aside to the file of the Assessing Officer by the Tribunal, therefore, the penalty order has no legs to stand. He accordingly submitted that the penalty levied by the Assessing Officer and sustained by the CIT (A) should be deleted.

4.

The Ld. DR on the other hand while conceding that the issue has been set aside to the file of the Assessing Officer submitted that this matter may be restored to the file of the Assessing Officer for fresh adjudication.

5.

We have considered the rival arguments made by both the sides and perused the orders of the authorities below. It is an admitted fact that the Tribunal vide order dated 17.08.2017 has restored the quantum appeal to the file of the Assessing Officer for fresh adjudication. Therefore, the very basis on which penalty 2 was levied does not survive. Therefore, penalty levied by the Assessing Officer and sustained by the CIT(A) is liable to be cancelled. We accordingly direct the Assessing Officer to cancel the penalty so levied u/s 271 (1) (c) of the IT Act. However, the Assessing Officer is at liberty to initiate fresh penalty proceedings after the order is passed by him in the light of the direction of the Tribunal. The appeal filed by the assessee is accordingly allowed.

6.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 15.02.2019

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