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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: Sh. N. K. Saini
ORDER This is an appeal by the assessee against the order dated 07.07.2016 of ld. CIT(A)-VIII, New Delhi.
Following grounds have been raised in this appeal: “1. That the order of Ld. CIT(A) is erroneous in facts and in law and is based on extraneous consideration and against the provision of the Act.
2. That the addition made by the Assessing Officer against which penalty was imposed has been reversed by Ld. Assessing Officer vide order dated 22-03-2016 in compliance of order of Hon'ble ITAT vide order No. 347/Del/2013 dated 22-03-2016. After deletion of addition the quantum of penalty will be reduced to NIL.
2 Sai Lubricants Pvt. Ltd.
3. That the Ld. C1T (A) erred in passing ex-parte order particularly where no notice was served upon the appellant.
The appellant craves leave or reserving the right to amend, modify, alter, add or forgo any ground(s) of appeal at any time before or during the hearing of this appeal.”
Nobody was present on behalf of the assessee neither any adjournment was sought. We, therefore, proceeded to decide the issue on merit after hearing the ld. DR. During the course of hearing the ld. DR was fair enough to concede that the addition on the basis of which the impugned penalty was levied by the AO u/s 271(1)(c) of the Act, now has been deleted.
4. I have considered the submissions of the ld. DR and perused the material available on the record. In the present case, on perusing the assessment order dated 22.03.2016 passed by the AO (copy of which is placed at page no. 14 of the assessee’s paper book), it is noticed that the AO has accepted the returned income. Now, it is clear that the addition on the basis of which the impugned penalty was levied is not in existence after giving effect to the order of the ITAT and when the addition on the basis of which the penalty was levied by the AO and sustained by the ld. CIT(A) is not in existence, no penalty u/s 271(1)(c) of the Income Tax Act, 1961 is leviable.
3 Sai Lubricants Pvt. Ltd. 5. On a similar issue the Hon’ble Supreme Court in the case of K.C Builders Vs ACIT reported at 265 ITR 562 held as under:
“Where the additions made in the assessment order on the basis of which penalty for concealment is levied, are deleted, there remains no basis at all for levying penalty for concealment and, therefore, in such a case no penalty can survive and the penalty is liable to be cancelled.” 6. In view of the above, the penalty u/s 271(1)(c) of the I.T. Act, 1961 levied by the AO and sustained by the ld. CIT(A) is deleted.
In the result, the appeal of the assessee is allowed. (Order Pronounced in the Court on 22/05/2017)