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Income Tax Appellate Tribunal, DELHI BENCHES: ‘A’, NEW DELHI
Before: SHRI N.K. SAINI, HON’BLE & SMT. BEENA A PILLAI
ORDER PER BEENA A PILLAI, JUDICIAL MEMBER Present appeal has been filed by assessee against order dated 01/06/15 passed by Ld. CIT (A)-XXVI, New Delhi for assessment year 2006-07 on following grounds of appeal: 1. “That the Ld.CIT(A) has erred both in law as well as on facts in sustaining the imposition of penalty of Rs. 1,71,35,600/- under the provisions of section 221 of the Income Tax Act, without establishing with some cogent evidence, that appellant is in default or is deemed to be in default in making payment of disputed demand.
2. That the Ld. CIT(A) has erred both in law as well as on facts in upholding the AO’s order of imposing maximum penalty u/s 221 of the Income Tax Act, without 1 DSC Ltd. appreciating that assessment order as a result of which demand was created, was pending in appeal for adjudication before the higher Appellate Authority.
3. That the Ld.CIT(A) has erred both in law and facts in sustaining the imposition of penalty without appreciating the fact that the appellants record was lying seized with the Custom & Excise authorities which was beyond the control of the assessee company and CIT(A) did not appreciate that the demand remains disputed.
4. That the Ld.CIT(A) has erred in law as well as on facts in mis-appreciating the facts of the case and holding the stay petition as infructuous, while doing so the Ld.CIT(A) has failed to appreciate that AO was again requested to keep the recovery proceedings in abeyance vide letter dated 08.01.2015, which remain undisposed off. The appellant craves leave to add, alter, amend, modify, or withdraw all or any of the above grounds of appeal
at any time on or before the hearing as may be advised.”
2. Brief facts of the case are as under: Assessment in the present case was completed under section 147 read with 143 (3) of the Act, vide order dated 30/03/14, at an assessed income of Rs.57,19,15,422/-. The tax payable by assessee on assessed income was Rs.1,71,35,600/-. It came to the notice of Ld.AO that assessee failed to pay demand within time period allowed in demand notice, and assessee preferred appeal before Ld.CIT (A). The appeal filed before first appellate authority was dismissed, vide order dated 10/11/14 and Ld.AO again issued notice under section 221(1) of the Act on 15/12/14 to pay outstanding demand along with interest. Thereafter, assessee vide letter dated 08/01/15 submitted that, demand may be kept in abeyance till disposal of appeal by this Tribunal.
DSC Ltd. 3. Ld. AO after considering the submissions by representative of assessee’s levied 100% penalty under section 221 (1) of the Act.
Aggrieved by order of Ld. AO assessee preferred appeal before Ld. CIT (A), who confirmed penalty so levied.
Aggrieved by order of Ld. CIT (A) assessee is in appeal before us now.
At the outset, Ld. Counsel submitted that quantum appeal that was pending before this on Tribunal in for relevant assessment year, stands disposed off vide order dated 31/10/18. He submitted that this Tribunal has allowed appeal filed by assessee and has quashed reassessment proceedings. Ld. Counsel submitted that as assessment proceedings itself has not been upheld, any demand that arises in view of the same, does not survive. He, thus, prayed for deletion of penalty.
Ld.Sr.DR placed reliance upon the orders of authorities below.
We have perused submissions advanced by both sides in the light of records placed before us.
Admittedly, this Tribunal vide order dated 31/10/18 (supra) in assessee’s own case for assessment year under consideration in quantum proceedings quashed and set-aside reassessment proceedings. In our view, on setting aside the assessment the impugned demand becomes ‘nil’ under such circumstances and DSC Ltd. any demand raised stands automatically deleted. Penalty under section 221 is based upon demand raised during assessment proceedings. As basis of levy of penalty under section 221 itself does not exist, penalty is liable to be deleted.
Accordingly we allow the grounds raised by assessee.
In the result appeal filed by assessee stands allowed.