BRAHMPUTRA CAPITAL AND FINANCIAL SERVICE LTD.,NEW DELHI vs. ITO, NEW DELHI

This is an appeal by the assessee against the penalty levied u/s 271(1)(c) of the Income Tax Act, 1961 by the AO and sustained by the ld. CIT(A).

During the course of hearing, the ld. Counsel for the assessee at the very outset stated that the addition on the basis of which the impugned penalty was levied by the AO and sustained by the ld. CIT(A) was deleted by the ITAT in vide order dated 30.09.2011. However, the said order was reversed by the Hon’ble Jurisdictional High Court vide order dated 03.09.2012 and thereafter the AO levied the penalty on the basis of addition confirmed by the Hon’ble High Court. Against the said order of the Hon’ble High Court, the assessee filed SLP before the Hon’ble Supreme Court 2 Brahmputra Capital and Financial Services Ltd. wherein vide order dated 13.12.2017 the matter was restored to the Hon’ble Jurisdictional High Court vide order dated 13.12.2017 and the Hon’ble High Court thereafter vide order dated 01.05.2018 in ITA No. 107/2012, deleted the additions and as on today the addition on the basis of which the impugned penalty was levied by the AO and sustained by the ld. CIT(A) is not in existence. The ld. Counsel for the assessee also furnished the copies of the aforesaid orders which are placed on record. The aforesaid contention of the ld. Counsel for the assessee was not controverted by the ld. Sr. DR.

We have considered the submissions of both the parties and perused the material available on the record. In the present case, it is an admitted fact that the addition on the basis of which the impugned penalty u/s 271(1)(c) of the Act was levied by the AO and sustained by the ld. CIT(A) is not in existence.

On a similar issue, the Hon’ble Supreme Court in the case of K. C. Builders & Others Vs ACIT (2004) 265 ITR 562 wherein it has been held as under: “Where the additions made in the assessment order on the basis of which penalty for concealment is levied, are deleted, there remains no basis at all for levying penalty for concealment and, therefore, in such a case no penalty can survive and the penalty is liable to be cancelled. Ordinarily, penalty cannot stand if the assessment itself is set aside.”

We, therefore, by keeping in view the ratio laid down by the Hon’ble Supreme Court in the aforesaid referred to case, are of the confirmed view that the impugned penalty u/s 271(1)(c) of the Act is not leviable when the addition on the basis of which the said penalty was levied by the AO has already been directed to 3 Brahmputra Capital and Financial Services Ltd. be deleted by the Hon’ble Jurisdictional High Court vide order dated 01.05.2018 in ITA No. 107/2012. Accordingly, the penalty u/s 271(1)(c) of the Act amounting to Rs.72,54,898/- levied by the AO and sustained by the ld. CIT(A) is deleted.

In the result, the appeal filed by the assessee is allowed. (Order Pronounced in the Court on 07/09/2018)