ACIT 32(3), MUMBAI vs. UNITED BUILDERS, MUMBAI

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ITA 7004/MUM/2016Status: DisposedITAT Mumbai25 April 2018AY 2007-083 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 quantum addition made in the assessment proceedings was deleted by a Coordinate Bench, the penalty levied under Section 271(1)(c) would not survive. Therefore, the deletion of penalty by the CIT(A) was upheld.

What were the facts?

The Revenue appealed against the deletion of penalty levied under Section 271(1)(c) for the Assessment Year 2007-08. The penalty was imposed because the income was initially assessed as business income instead of capital gains.

What were the issues?

Whether penalty under Section 271(1)(c) can survive if the underlying addition is deleted. The issue revolves around the consequential nature of penalty to the quantum of assessment.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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

Before: SHRI C.N. PRASAD, HONBLE & SHRI N.K. PRADHAN, HONBLE

For Appellant: Shri Govind Javeri
For Respondent: Shri Pooja Swaroop
Hearing: 18.04.2018Pronounced: 25.04.2018

O R D E R

PER C.N. PRASAD, JUDICIAL MEMBER

1.

This appeal is filed by the Revenue against the order of the Ld. Commissioner of income Tax (Appeals)–44, Mumbai dated 16.09.2016 for the Assessment Year 2007-08 in deleting the penalty levied u/s. 271(1)(c) of the Act.

(A.Y: 2007-08) M/s. United Builders 2. At the outset Ld. Counsel for the assessee submitted that, the quantum addition made in the Assessment Proceedings has been deleted by the Coordinate Bench in ITA.No. 4864/Mum/2013 dated 29.07.2016. Copy of the order is placed on record. It is submitted that since the quantum addition/disallowance is deleted by the Tribunal the penalty levied u/s. 271(1)(c) of the Act will not survive.

3.

Ld.DR vehemently fairly concedes the position.

4.

We have perused the orders of the Coordinate Bench in quantum proceedings and find that the Tribunal held that there is no justification on the part of the lower authorities in re-characterizing the income earned from sale of land as “income from business” instead of capital gains. We find that penalty was levied by the Assessing Officer for the reason that income was assessed under the head income from business as against income from capital gains and assessee had committed default within the meaning of Explanation 1 to Section 271(1)(c) of the Act in reporting income under head of capital gains as against business income. Since the quantum addition is deleted by the Tribunal the penalty levied u/s.271(1)(c) of the Act will not survive and thus we hold that the Ld.CIT(A) rightly deleted the penalty taking note of the fact that the Tribunal deleted the addition made in quantum proceedings.

(A.Y: 2007-08) M/s. United Builders 5. In the result, appeal of the Revenue is dismissed.

Order pronounced in the open court on the 25th April, 2018.

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