DCIT,CC-5(1), MUMBAI vs. RAMESHKUMAR & CO., MUMBAI

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ITA 1236/MUM/2018Status: DisposedITAT Mumbai28 June 2019AY 2011-124 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the quantum addition, on which the penalty was based, was deleted by a coordinate bench of the ITAT, the penalty order does not survive. Therefore, the CIT(A)'s deletion of the penalty was upheld.

What were the facts?

The Assessing Officer (AO) made an addition under section 69C, leading to a penalty under section 271(1)(c). The Commissioner of Income Tax (Appeals) deleted this penalty. The Revenue appealed this deletion.

What were the issues?

Whether penalty under section 271(1)(c) can be sustained when the underlying quantum addition has been deleted. Whether the CIT(A) erred in deleting the penalty.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 69C

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI

Before: SHRI RAJESH KUMAR (AM) & SHRI RAM LAL NEGI (JM)

For Respondent: Shri D.G. Pansari (DR)
Hearing: 03/06/2019Pronounced: 28/06/2019

O R D E R

PER RAM LAL NEGI, JM

1.

This appeal has been filed by the revenue against the order dated 05.12.2017 passed by the Commissioner of Income Tax (Appeals)-37 (for short ‘the CIT(A), Mumbai, for the assessment year 2011-12, whereby the Ld. CIT(A) has allowed the appeal filed by the assessee against the penalty order passed u/s 271 (1) (c) of the Income Tax Act, 1961 (for short the ‘Act’).

2.

The revenue has preferred this appeal before the Tribunal on the following effective grounds:- 1. “Whether on the facts and circumstances of the case the Ld. CIT (A) has erred in deleting the penalty levied u/s 271 (1) (c) of the Income –tax Act at Rs. 12,06,421/-? 2. Whether on the facts and circumstances of the case the Ld. CIT (A) erred in not appreciating that the quantum appeal was pending adjudication.?” Assessment Year: 2011-12

3.

This case was fixed for hearing on 03.06.2019. When the case was called out for hearing none appeared on behalf of the assessee. From the perusal of the record, we are satisfied that the registry had informed the assessee about the date of hearing on 27.03.2019. Hence, we decided to dispose of the appeal on the basis of the material on record after hearing the Ld. Departmental Representative (DR).

4.

At the outset, the Ld. DR pointed out that in the present case the Tribunal has deleted the addition made by the AO in quantum appeal vide order dated 27.01.2017. 5. We have perused the material on record. We notice that in the present case the AO completed the assessment u/s 143 (3) r.w.s 147 of the Act determining the total income of the assessee at Rs. 6,12,52,900/- as against the declared income of Rs. 3,00,18,690/-, after making addition of Rs. 3,12,34,214/- u/s 69C of the Act. In the first appeal, the Ld. CIT (A) partly allowed the appeal of the assessee and restricted the addition to Rs. 39,04,277/-. The assessee challenged the order passed by the Ld. CIT (A) before the ITAT. The “D” Bench of the Tribunal deleted the addition by following the view taken by the coordinate Bench in assessee’s own case for the AY 2010-11 vide order dated 27.01.2017. In the meantime, the AO passed the penalty order u/s 271 (1) (c) of the Act and levied penalty of Rs. 12,06,421/-. The assessee challenged the penalty order before the Ld. CIT (A). The Ld. CIT

(A) deleted the penalty levied by the AO. The operative part of the order of the Ld.CIT (A) reads as under:-

“6. It is evident from the order of the ITAT that the honorable ITAT has decided the appeal in favour of the appellant and deleted the addition. In the case of K.C. Builders vs. ACIT reported at 265 ITR 562/Taxman 461 (SC), the Hon’ble Supreme Court has held that if the quantum addition based on which the penalty is levied, is restored , penalty u/s 271 (1) (c) on the additions/ disallowance made does not sustain. In view Assessment Year: 2011-12 of the same, since the quantum addition made in the assessment order is deleted by the Hon’ble ITAT vide Order No. & ITA No. 608/Mum/2015 dated 27.01.2017, the penalty levied thereon does not survive. On account of these facts, the penalty levied is cancelled. The ground raised becomes infructuous.

6.

As pointed out by the Ld. CIT (A), since the coordinate Bench has deleted the addition on the basis of which the AO has passed penalty order, the Ld. CIT (A) has rightly allowed the appeal of the assessee and deleted the penalty levied u/s 271 (1) (c) of the Act. Hence, there is no infirmity in the order passed by the Ld. CIT (A). We accordingly dismiss the sole ground of appeal of the revenue and direct the AO to delete the penalty. In the result, appeal filed by the revenue for assessment year 2011-2012 is dismissed.

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