M/S. CRAFTPAC CONTAINERS PVT. LTD.,NEW DELHI vs. ITO, NEW DELHI

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ITA 2962/DEL/2017Status: DisposedITAT Delhi07 December 2017AY 2011-124 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the addition of Rs. 4 crores, on which the penalty was levied, was subsequently deleted by the ITAT, the penalty would not survive. Therefore, the penalty was cancelled.

What were the facts?

The assessee's income was enhanced by Rs. 4 crores by the CIT(A), and penalty proceedings under Section 271(1)(c) were initiated. The assessee appealed the enhancement.

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the addition forming the basis of the penalty has been deleted by a higher appellate authority.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 2(22)(e)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES “B”: DELHI

Before: SHRI BHAVNESH SAINI & SHRI PRASHANT MAHARISHI

Hearing: 05.12.2017Pronounced: 07.12.2017

ORDER PER BHAVNESH SAINI, J.M.

This appeal by assessee-company has been directed against the order of the Ld. CIT(A)-2, New Delhi, dated 28th February, 2017, for A.Y. 2011-2012, challenging the levy of penalty under section 271(1)(c) of the I.T. Act, 1961.

2.

Briefly, the facts of the case are that assessment in this case was completed under section 143(3) of the I.T. Act on 28th

2 ITA.No.2962/Del.2017 M/s. Craftpac Containers Pvt. Ltd., New Delhi. February, 2014, at an income of Rs.1,32,71,231 after making addition of Rs.1,00,35,866 on account of deemed dividend applying the provisions of Section 2(22)(e) of the I.T. Act. The assessee filed appeal before Ld. CIT(A) challenging the above addition. The Ld. CIT(A) vide order dated 12th October, 2016 deleted the protective addition of Rs.1,00,35,866 under section 2(22)(e) of the I.T. Act.

However, the income of the assessee-company was enhanced by Rs.4 crores by Ld. CIT(A) vide the same order dated 12th October, 2016.

Penalty proceedings under section 271(1)(c) of the Act were also initiated in the same order. The Ld. CIT(A) vide impugned order dated 28th February, 2017 in the absence of any explanation from the side of the assessee-company levied penalty under section 271(1)(c) of the I.T. Act on the addition of Rs.4 crores made above.

3.

The Learned Counsel for the Assessee submitted that the quantum order of the Ld. CIT(A) dated 12th October, 2016 whereby addition was enhanced by Rs.4 crores was subject matter in appeal before ITAT ‘B’ Bench in ITA.No.547/Del./2017 for A.Y. 2011-2012 and vide order dated 28th August, 2017, the addition of Rs.4 crores have been deleted by the Tribunal. Copy of the order is placed on 3 ITA.No.2962/Del.2017 M/s. Craftpac Containers Pvt. Ltd., New Delhi. record. He has, therefore, submitted that since addition have been deleted, therefore, penalty would not survive.

4.

The Ld. D.R. did not dispute that addition of Rs.4 crores on which penalty have been levied, has been deleted by the ITAT, Delhi Bench in the case of the assessee-company.

5.

After considering the submissions of both the parties, we are of the view that penalty under section 271(1)(c) of the Act would not survive in the facts and circumstances of the case. The penalty order levied by the Ld. CIT(A) on the basis of addition made at Rs.4 crores while passing the appellate order dated 12th October, 2016.

The penalty was initiated on the addition of Rs.4 crores which have ultimately been deleted by the Tribunal vide order dated 28th August, 2017. Therefore, nothing survive in favour of the Revenue so as to levy penalty under section 271(1)(c) of the Act. In view of the above, we set aside the orders of the authorities below and cancel the penalty under section 271(1)(c) of the Act.

6.

In the result, appeal of assessee is allowed.

4 ITA.No.2962/Del.2017 M/s. Craftpac Containers Pvt. Ltd., New Delhi. Order pronounced in the open Court.

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