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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: SHRI G.S. PANNU (AM) & SHRI RAM LAL NEGI (JM)
O R D E R
PER RAM LAL NEGI, JM
This appeal has been filed by the revenue against the order dated 15.02.2017 passed by the Commissioner of Income Tax (Appeals)-17 (for short ‘the CIT(A), Mumbai, for the assessment year 2009-10, 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’).
Brief facts of the case are that the assessee engaged in the business of service and repair of aircraft parts claimed deduction u/s 80IA(4)(i)(a) & (b) of the Act. The AO disallowed the claim holding that since the assessee is in the business of service and repairs, it is not eligible for the said deduction. Accordingly, the AO initiated penalty proceedings u/s 271 (1) (c) of the Act and levied penalty of Rs. 40,49,310/-. The assessee challenged the penalty order before the Ld. CIT (A). During the appellate proceedings, the assessee pointed Assessment Year: 2009-10 out that the ITAT has deleted the addition in quantum appeal holding the assessee company eligible for claim of the said deduction. Accordingly, the Ld. CIT (A) deleted the penalty levied by AO holding that once the addition is deleted, penalty levied on the basis of addition, does not survive. Against the said order, the revenue is in appeal before the Tribunal.
The revenue has preferred present appeal on the following effective grounds:- 1. “On the facts and in the circumstances of the case and in law, whether the Ld. CIT (A) is justified in cancelling the penalty u/s 271(1)(c) of the Act without appreciating that the assessee had claimed an inadmissible claim of deduction u/s 80IA(4) of the Act, thereby, furnished inaccurate particulars of its income, though it is well aware of the fact that it is not developing any infrastructure facility for the airport but only carrying out the repair and maintenance of the aircrafts and helicopter and the same does not amount to developing or operating or maintaining airport within the meaning of section 80IA(4) of the Act.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in deleting the penalty u/s 271 (1)(c) of the Act without appreciating that the assessee had failed to rebut the presumption in Explanation-1 of section 271 (1)(c) of the Act.?”
At the outset, the Ld. counsel for the assessee urged that since the ITAT has decided the quantum appeal in favour of the assessee, the Ld. CIT (A) has rightly allowed the appeal of the assessee and deleted the penalty. The Ld. Departmental Representative (DR) fairly conceded that the addition on account of disallowance of deduction u/s 80IA(4) has been deleted by the ITAT.