ACIT, NEW DELHI vs. M/S. RUSSIAN TECHNOLOGY CENTRE PVT. LTD., NEW DELHI

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ITA 4202/DEL/2014Status: DisposedITAT Delhi03 July 2017AY 2002-034 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 forming the basis of the penalty were deleted and affirmed by the High Court, the penalty was not justified. Following the Supreme Court's decision in K.C. Builders, the penalty cannot survive if the assessment itself is set aside.

What were the facts?

The appeals by the department were against the deletion of penalties levied under Section 271(1)(c) for multiple assessment years. The penalties were based on additions made by the AO which were subsequently deleted by the ITAT and affirmed by the High Court.

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the additions on which it was based have been deleted by higher authorities. The validity of penalty when the underlying additions are non-existent.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI

For Appellant: Ms. Bharti Sharma, CA
Hearing: 03.07.2017Pronounced: 03.07.2017

Heard together (3 matters)

ITA No. 4202/Del/2014
ITA No. 4204/Del/2014
ITA No. 4205/Del/2014

Read from the judgment's own cause title. This page is filed under one of them.

ORDER Per N. K. Saini, AM: These appeals by the department are directed against the separate orders each dated 15.05.2014 passed by the ld. CIT(A)-1, New Delhi.

2.

All these appeals relate to the deletion of penalty levied by the AO u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act) amounting to Rs.10,02,088/-, Rs.32,07,926/- & 42,54,118/- for the assessment years 2002-03, 2005-06 & 2007-08 respectively.

1.

2 4204 & 4205/Del/2014 Russian Technology Centre Pvt. Ltd. 3. Since the issue involved is common and the appeals were heard together so these are being disposed off by this consolidated order for the sake of convenience and brevity.

4.

During the course of hearing, the ld. Counsel for the assessee at the very outset stated that the quantum additions on the basis of which the penalties u/s 271(1)(c) of the Act were levied by the AO, have been deleted by the ITAT vide order dated 12.04.2013 in 5390 & 5391/Del/2011 for the assessment years 2002-03, 2005-06 & 2007-08 respectively. It was further stated that the said order of the ITAT has been affirmed by the Hon’ble Jurisdictional High Court vide order dated 15.12.2016 (copy of the said orders were furnished which are placed on record).

5.

In his rival submissions the ld. DR although supported the penalty orders of the AO but could not controvert the aforesaid contention of the ld. Counsel for the assessee.

6.

We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is noticed that the additions on the basis of which penalty u/s 271(1)(c) of the Act was levied by the AO have been deleted by the ITAT in 5390 & 5391/Del/2011 for 3 4204 & 4205/Del/2014 Russian Technology Centre Pvt. Ltd. the assessment years 2002-03, 2005-06 & 2007-08 respectively, vide common order dated 12.04.2013. The said order was a subject matter of the departmental appeal before the Hon’ble Jurisdictional High Court wherein vide order dated 15.12.2016, the order dated 12.04.2013 passed by the Tribunal, has been affirmed by observing in para 13 as under: “13. In view of the above, this Court is of the view that the conclusion of the Tribunal in deleting the additions made cannot be faulted. Accordingly, the questions of law are answered against the Revenue and in favour of the assessee. The order of the Tribunal is, therefore, affirmed.”

7.

Now it is not in dispute that the additions on the basis of which the penalty u/s 271(1)(c) of the Act was levied by the AO have been deleted vide order dated 12.04.2013 by the ITAT and the said order has been affirmed by the Hon’ble Jurisdictional High Court. Since, the additions/disallowances which were the basis of levying the impugned penalty u/s 271(1)(c) of the Act were not in existence, therefore, the penalty u/s 271(1)(c) of the Act levied by the AO for the assessment years 2002-03, 2005-06 and 2007-08 were not justified and rightly deleted by the ld. CIT(A).

8.

On a similar issue the Hon’ble Supreme Court in the case of K. C. Builders & Others Vs ACIT (2004) 265 ITR 562 has held as under:

4 4204 & 4205/Del/2014 Russian Technology Centre Pvt. Ltd. “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. Ordinarily, penalty cannot stand if the assessment itself is set aside.”

9.

We, therefore, by keeping in view the ratio laid down by the Hon’ble Supreme Court in the aforesaid referred to order, are of the confirmed view that the penalty u/s 271(1)(c) of the Act levied by the AO were rightly deleted by the ld. CIT(A). Accordingly, we do not see any merit in these appeals of the department.

10.

In the result, the appeals of the department are dismissed. (Order Pronounced in the Court on 03/07/2017)

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