ACIT 23(3), MUMBAI vs. SANDHU BUILDERS, MUMBAI

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ITA 210/MUM/2017Status: DisposedITAT Mumbai22 June 2018AY 2008-093 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the additions on which the penalty was levied no longer survived due to a previous Tribunal order, the penalty itself was not tenable. Therefore, the CIT(A)'s decision to delete the penalty was upheld.

What were the facts?

The Assessing Officer made additions for proportionate interest on interest-free advances and personal expenses out of tour and travelling expenses, and initiated penalty proceedings under Section 271(1)(c). The CIT(A) deleted the penalty on both counts.

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the additions forming the basis of the penalty have been deleted or set aside by a higher appellate authority.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 36(1)(iii),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “J”, MUMBAI

Before: SHRI G.S. PANNU & SHRI PAWAN SINGH

For Appellant: Ms. Arju Garodia
For Respondent: Shri Himank Desai
Hearing: 20/06/2018Pronounced: 22/06/2018

The captioned appeal by the Revenue is directed against the order of CIT(A)-34, Mumbai dated 19.10.2016, pertaining to the Assessment Year 2008-09, which in turn has arisen from the order passed by the Assessing Officer, Mumbai dated 16.03.2015 under section 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’).

2.

In brief, the relevant facts are that the Assessing Officer in the assessment finalised u/s 143(3) of the Act on 30.12.2010 made an addition of Rs.42,94,355/- being proportionate interest on interest-free advances for non-business purposes out of borrowed capital u/s 36(1)(iii) of the Act and Rs.4,00,000/- as personal expenses out of tour and travelling expenses and had initiated separately, penalty proceedings u/s 271(1)(c) of the Act. The Assessing Officer levied penalty of Rs.14,60,000/- being 100% of the tax sought to be evaded qua the aforesaid two disallowances. The CIT(A) has since deleted the levy of penalty on both the counts. Against such a decision of the CIT(A), Revenue is in further appeal before us.

3.

At the time of hearing, the learned representative for the assessee pointed out that the quantum proceedings against the disallowance of proportionate interest and a portion of tour and travelling expenses has been decided in favour of the assessee by the Tribunal vide its order in dated 18.08.2017 inasmuch as the disallowance out of interest expense has been deleted and the disallowance out of tours and travel expense has been set-aside and matter restored to the Assessing Officer for examination afresh. The learned representative also submitted that since the additions, on the basis of which the penalty has been levied u/s 271(1)(c), do not survive in view of the order of the Tribunal dated 18.08.2017 (supra), the impugned penalty does not survive.

4.

The ld. DR did not oppose the factual matrix brought out by the learned representative for the assessee.

5.

We have heard the rival submissions. We find that the additions on the basis of which the penalty proceedings were initiated do not survive in view of the order of the Tribunal dated 18.08.2017 (supra), therefore, the impugned penalty levied u/s 271(1)(c) of the Act is not tenable. Thus, we uphold the ultimate decision of the CIT(A) in deleting the penalty, albeit on a different ground.

6.

In the result, appeal of the Revenue is dismissed.

Order pronounced in the open court on 22nd June, 2018.

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