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

PER BENCH:

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/-

2 ITA NO. 2964-67/Del/2017 (U.P.Distillers Association)

(iii) Assessment year 2005-06 – Penalty of Rs. 15,22,42,295/-

(iv) Assessment year 2006-07 – Penalty of Rs. 18,99,01,155/-.

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 ITA nos. 9, 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

3 ITA NO. 2964-67/Del/2017 (U.P.Distillers Association)

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.

4 ITA NO. 2964-67/Del/2017 (U.P.Distillers Association)

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.

Sd/- Sd/- (G.D.AGRAWAL) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEMBER

Dated: 27.02.2019 *BR*