DCIT, NEW DELHI vs. M/S. NORTH DELHI POWER LTD, NEW DELHI

This appeal by the Revenue for the assessment year 2003-04 is directed against the order of learned CIT(A)-XVI, New Delhi dated 16th September, 2013.

The only ground raised by the Revenue in this appeal is against the cancellation of the levy of penalty of `3,10,65,485/- which was levied by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961.

At the outset, it was pointed out by the learned counsel that this penalty was levied in respect of the addition of `8,45,31,932/- made by the Assessing Officer on account of unpaid energy tax by invoking Section 43B of the Act. This addition was made in the assessment order passed u/s 147/143(3) dated 23rd December, 2009. The assessee had filed the appeal against the assessment order before the learned CIT(A) and further to ITAT. The ITAT, in order dated 1st January, 2016, held the reopening of assessment u/s 147 to be bad in law. Consequently, the assessment order passed u/s 147/143(3) dated 23rd December, 2009 was quashed. The order of the ITAT has been upheld by Hon'ble Jurisdictional High Court vide order dated 4th November, 2016 in ITA No.698/2016. Since the assessment order in which the addition was made on which penalty u/s 271(1)(c) is levied is quashed by the ITAT, the penalty cannot survive.

Learned DR, on the other hand, relied upon the orders of authorities below.

After considering the above facts and submissions of both the sides, we entirely agree with the submission of the learned counsel for the assessee that when the assessment order has been quashed by the ITAT, the penalty based upon the addition made in the assessment order cannot survive. Accordingly, we dismiss the appeal filed by the Revenue.

In the result, the appeal of the Revenue is dismissed. Decision pronounced in the open Court on 06.11.2017.