U.P. DISTILLERS ASSOCIATION,NEW DELHI vs. ACIT, NEW DELHI

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ITA 2964/DEL/2017Status: DisposedITAT Delhi27 February 2019AY 2003-045 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 assessment proceedings under Section 153A were void ab initio and the quantum additions were deleted, the penalties imposed under Section 271(1)(c) did not survive. Consequently, the orders of the CIT(Appeals) were set aside and the penalties were directed to be deleted.

What were the facts?

The assessee, U.P. Distillers Association, had penalties imposed under Section 271(1)(c) for multiple assessment years following a search action. The ITAT had previously allowed the assessee's appeals in the quantum assessments, deleting the additions made.

What were the issues?

Whether penalties under Section 271(1)(c) can survive when the underlying assessment proceedings under Section 153A are held to be void ab initio and quantum additions are deleted.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 12AA,Section 132,Section 153A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI

Before: SHRI G.D.AGRAWAL & SHRI SUDHANSHU SRIVASTAVA

For Respondent: Ms. Deepika Mittal, CIT(DR)
Hearing: 26.02.2019Pronounced: 27.02.2019

PER BENCH:

1.

These four appeals are filed by the assessee and challenge the confirmation of imposition of penalty imposed u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the captioned for assessment years as under:-

(i) Assessment year 2003-04 – Penalty of Rs. 17,89,20,000/- (ii) Assessment year 2004-05 – Penalty of Rs. 25,59,55,757/- (iii) Assessment year 2005-06 – Penalty of Rs. 15,22,42,295/- (iv) Assessment year 2006-07 – Penalty of Rs. 18,99,01,155/-.

2.

The brief facts of the case are that the assessee is an Association of Distillers in the state of Uttar Pradesh. The Association was granted registration u/s 12AA of the Act vide order dated 23.05.1994 with effect from 26.10.1989. The order of granting registration was further made effective up 01.10.2014 by virtue of the order of the Hon’ble High Court of Delhi. Search and seizure action u/s 132 of the Act was conducted at the residence of Shri R.K. Miglani, Secretary General of the Association as well as at the premises of the Association on 14.02.2006. Documents found at the residence of Shri R.K. Miglani were seized and his statement was recorded u/s 132(4) of the Act. Fresh assessments were completed u/s 153A of the Act in respect of all the captioned years and penalty proceedings u/s 271(1)(c) of the Act were also initiated for all the four years. The assessee’s appeals in the quantum assessments were dismissed by the Ld. CIT (Appeals). However, the assessee’s appeals before the ITAT were allowed and the quantum additions stood deleted in 10, 11/Del/2012 and 3208, 3209, 3210, 3211/Del/2013 vide order dated 14.12.2018. Vide Para 202 on page 126, the ITAT held that the action taken u/s 153A of the Act against the assessee was vide ab initio and illegal because no search had taken place in the case of the assessee. Thereafter, on merits also the ITAT held that the quantum additions made to the returned income of the assessee were unsustainable in facts and law. The relevant observations of the ITAT in this regard are found in Para 230 appearing at page 153 of the said order.

3.0 The Ld. Authorized Representative has placed on record, copy of the above said ITAT order in the quantum proceedings and has submitted that in view of the quantum additions having been deleted by the ITAT, the impugned penalties did not survive.

4.0 The Ld. CIT-DR supported the orders of the lower authorities but fairly accepted that the quantum proceedings had been settled by the Tribunal in favour of the assessee.

5.0 Accordingly, in view of the fact that the Tribunal has held the assessment proceedings u/s 153A of the Act as being void ab initio and invalid and has also deleted the additions on merits in all the four years under appeal, the impugned penalties do not survive. The orders of the Ld. CIT (Appeals) are set aside and the impugned penalties are directed to be deleted.

6.0 In the final result, all the four appeals of the assessee stand allowed.

Order pronounced in the open court on 27.02.2019.

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