ABDULWAHID ABDULKARIM QURESHI,SANGAMNER vs. INCOME TAX OFFICER, WARD 2, AHMEDNAGAR

Facts

The Assessing Officer levied a penalty of Rs. 47,94,700/- under Section 271(1)(c) of the Income Tax Act, 1961, based on an addition of Rs. 1,38,31,394/- treated as unexplained cash credit under Section 68, which was sustained by the Ld. CIT(A) / NFAC. The assessee filed an appeal against this order with a 128-day delay, which was subsequently condoned by the Tribunal.

Held

The Tribunal observed that a previous Tribunal order in the assessee's own case for the same assessment year had already deleted the original addition made by the Assessing Officer. Since the very foundation for levying the penalty under Section 271(1)(c) no longer existed due to the deletion of the underlying addition, the Tribunal directed the deletion of the penalty.

Key Issues

Whether a penalty levied under Section 271(1)(c) for unexplained cash credit can be sustained when the underlying addition itself has been deleted by a prior Tribunal order.