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Facts
The assessee filed their return of income for AY 2014-15 declaring a total income of Rs. 2,28,290/-. During scrutiny, an addition of Rs. 18,36,876/- was made. Subsequently, penalty proceedings were initiated under section 271(1)(c) of the Income Tax Act, 1961, for furnishing inaccurate particulars of income, and a penalty of Rs. 4,60,3143/- was levied. The CIT(A) dismissed the assessee's appeal against the penalty.
Held
The Tribunal noted that a co-ordinate bench had allowed the appeal against the quantum addition. Therefore, if the addition on which the penalty was based is deleted, there is no basis for levying the penalty. The Tribunal relied on the Supreme Court decision in K.C. Builders vs. ACIT.
Key Issues
Whether penalty under section 271(1)(c) is sustainable when the addition on which it is based has been deleted?
Sections Cited
271(1)(c), 250, 143(3)
AI-generated summary — verify with the full judgment below
Before: MS. SUCHITRA RAGHUNATH KAMBLE & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), dated 10.02.2025 by the National Faceless Appeal Centre, Delhi/Commissioner of Income- tax(Appeals) [in short, ‘CIT(A)’] for the assessment year (AY) 2014-15, confirming penalty levied u/s 271(1)(c) of the Act by Assessing Officer (in short, ‘AO’) vide order dated 26.03.2019.
Grounds of appeal
raised by the assessee are as under: “1. The ld. CIT(A) erred in law and on facts of the case, in confirming penalty of Rs.4,60,313/- levied u/s 271(1)(c).
2. The appellant craves leave to add, amend or alter the grounds of appeal at the time of hearing, if need arise.”
A.Y 14-15 Laxmiben N Chaute 3. Facts of the case in brief are that assessee filed return of income for AY 2014-15 on 09.07.2014 declaring total income of Rs.2,28,290/-. The case was taken up for scrutiny and after hearing the assessee, addition of Rs.18,36,876/- was made, being the difference between the value of jantri and the value as per the sale deed, vide order u/s 143(3) dated 30.01.2016. Penalty proceedings u/s 271(1)(c) were also separately initiated for furnishing inaccurate particulars of income. Subsequently, the AO issued show cause notice and after hearing the assessee, levied minimum penalty of Rs.4,60,3143/-, being 100% of the tax sought to be evaded. Aggrieved by the penalty order of the AO, assessee filed appeal before CIT(A) who dismissed the appeal.
Aggrieved by the order of CIT(A), assessee has filed present appeal before the Tribunal. The Ld. AR submitted that the co-ordinate Bench of this Tribunal has allowed the appeals of the assessee and others in 385, 284, 285 and 681/SRT/2017/2018 dated 31.01.2022 against the order of CIT(A), who had confirmed the additions made by the AO. The appeal of the assessee is in (AY 2014-15). The Ld. AR has filed copy of the said order of the Tribunal. He submitted that once the main demand stands deleted, there can be no sustainable penalty. Accordingly, he requested to set aside the order of CIT(A).
On the other hand, Ld. Sr-DR for the revenue relied on the orders of the lower authorities.
A.Y 14-15 Laxmiben N Chaute 6. We have heard both the parties and perused the materials on record carefully. We have also gone through the order of the co-ordinate Bench of this Tribunal in case of the assessee cited supra. We find that co-ordinate Bench has allowed the appeal of assessee against the quantum addition. Where the addition made in the assessment order, on the basis of which the penalty was levied, is deleted, they remains no basis at all for levying the penalty and, therefore, in such a case no such penalty can survive and the same is liable to be cancelled. Reliance is placed on the decision of Hon’ble Supreme Court in case of K.C.Builders vs. ACIT, 265 ITR 562 (SC). Hence, the order of CIT(A) is set aside and appeal of the assessee is allowed.
In the result, appeal of the assessee is allowed.