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Facts
The Assessing Officer initiated penalty proceedings under Section 271(1)(c) against the assessee for furnishing inaccurate particulars of income after making additions under Section 153A read with Section 143(3). The Ld. CIT(A) initially confirmed the additions and enhanced them, leading to a penalty of Rs. 3,40,01,806/-. However, the CIT(A) later deleted this penalty, holding that the quantum additions were deleted by the ITAT.
Held
The Tribunal upheld the CIT(A)'s decision, confirming that the penalty levied under Section 271(1)(c) is not sustainable once the underlying quantum additions have been deleted by the ITAT in the assessee's own case. The Tribunal noted that additions related to interest income were found unsustainable in a prior order. Consequently, the Revenue's appeals for all assessment years were dismissed.
Key Issues
Whether a penalty under Section 271(1)(c) can be sustained if the quantum additions on which it was based are subsequently deleted by the appellate tribunal.
Sections Cited
Section 271(1)(c), Section 153A, Section 143(3)
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Income Tax Appellate Tribunal, DELHI BENCH: ‘H’, NEW DELHI
Before: SHRI SHAMIM YAHYA, & SHRI VIMAL KUMAR
ORDER PER BENCH :
These appeals filed by the Revenue and Cross Objections by the Assessee are directed against the separate impugned orders all dated 11.05.2023 passed by the Ld. CIT(A)/NFAC, New Delhi in relation to assessment years 2008-09, 2009-10 & 2010-11 respectively. Since common issues involved in the department appeals, hence, the same were heard together and are being disposed of by this common order for the sake of convenience, by dealing with (AY 2008-09) being the lead case.
The ground raised in Revenue’s appeal no. 3081/Del/2024 (AY 2008-09) read as under:- “Whether, on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the penalty of Rs. 3,40,01,806/- u/s. 271(1)(c) when the appeal of the Revenue against the quantum is pending before the Hon’ble High Court and yet to attain finality.”
3. Briefly stated, facts are that the AO passed the assessment order u/s. 153A read with section 143(3) on 30.3.2015 after making additions. Simultaneously, AO had initiated penalty proceedings u/s. 271(1)(c) of the Act for having furnished inaccurate particulars of income by the assessee. On first appeal, against the additions, the Ld. CIT(A) confirmed the addition, but also enhanced it to Rs. 10,00,34,735. AO proceeded with the penalty proceedings u/s. 271(1)(c) in respect of Rs. 10,00,34,735/- considering it to be income in respect of which the assessee was deemed to have concealed the particulars of income on account of furnishing the inaccurate particulars of income. Accordingly, the 2 TO 3083/DEL/2024 AND CO NOS. 93 TO 95/DEL/2024 AO imposed the penalty of Rs. 3,40,01,806/- u/s. 271(1)(c) vide order dated 29.3.2018. Against the penalty order, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 11.5.2023 has partly allowed the appeal of the assessee by deleting the penalty in dispute by holding that once the quantum additions have been deleted by the ITAT, the penalty is not sustainable in the eyes of law. Against the action of the ld. CIT(A), Revenue is in appeal before us.
At the time of hearing, Ld. Counsel for the assessee stated that Ld. CIT(A) has deleted the penalty levied by the AO u/s. 271(1)(c) of the Act by holding that once the additions made by the AO in the assessment order have been deleted by the ITAT in the quantum appeals then the penalty u./s. 271(1)(c) does not survive. He further submitted that in fact part of the additions made by the AO were deleted by the ld. CIT(A) also and AO levied the penalty only on the amounts which were upheld by the Ld. CIT(A). Per contra, Ld. DR fairly accepted the same.
Upon hearing both the counsels and perusing the records, we find that in the quantum appeal relating to this penalty appeal, has been deleted by the ITAT vide order dated 20.4.2023 in assessee’s own case, by holding as under:- “…Owing to the conclusion that no interest has been paid by M/s Vatika Ltd., the additions made in the hands of M/s U.K. Paints, M/s Span India Pvt. Ltd., M/s Scorpio Research & Consultants Pvt. Ltd., M/s SEH Realtors Pvt. Ltd. on account of interest income are unsustainable.” 5.1 In view of above, we are of the considered opinion that once the quantum addition stands deleted, the penalty levied thereon is not sustainable in the eyes of law and thus deserves to be deleted. Hence, Ld. CIT(A) has rightly deleted the penalty in dispute. Accordingly, we do not find any infirmity in the order of TO 3083/DEL/2024 AND CO NOS. 93 TO 95/DEL/2024 the Ld. CIT(A) and therefore, uphold the same. Resultantly, the appeal filed by the Revenue for the assessment year 2008-09 stands dismissed.
As regards assessment years 2009-10 & 2010-11 are concerned. Since the facts of the case are similar and identical to assessment year 2008-09 as aforesaid, hence, our aforesaid decision given for the assessment year 2008-09 shall apply mutatis mutandis to the assessment years 2009-10 & 2010- 11 as well. We hold and direct accordingly. As a result, the revenue’s appeals for AYs 2009-10 & 2010-11 also stand dismissed.
As regards Assessee’s 03 Cross Objections are concerned, since the Ld. Counsel for the assessee during the hearing, has made a statement that he is not pressing and the same may be dismissed as such. Keeping in view of the same, all the Cross Objections of the Assessee are accordingly dismissed, as not pressed.