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Income Tax Appellate Tribunal, DELHI BENCH ‘G’ NEW DELHI
Before: SHRI BHAVNESH SAINI & SHRI L.P. SAHU
Per L.P. Sahu, Accountant Member:
This appeal has been filed by the assessee against the order of the ld.
CIT(A)-XXXI, New Delhi dated 22.07.2013 confirming the penalty imposed u/s. 271(1)(c) of the IT Act for A.Y. 2005-06. The grounds raised read as under:
“1. On the facts and in circumstances of the case, Ld. Commissioner of Income Tax (Appeals), was not justified in dismissing appeal of the assessee and confirming penalty u/s 271(1)(c) of IT. Act amounting to Rs.17,76,431/-, being 100% of the tax sought to be evaded on the concealment of Income to the extent of Rs.52,77,574/-.
On the facts and in circumstances of the case, Ld Commissioner of Income Tax (Appeals), was not justified in not accepting the bona-fide explanations furnished by the assessee during appellate proceedings.
3. It is contended that Assessment proceedings and Penalty proceedings are separate and independent proceedings, therefore, Ld. Commissioner of Income Tax (Appeals) erred in not appreciating all the evidences and explanations furnished by the assessee, on the issues involved.”
2. The brief facts of the case are that a search and seizure operation u/s. 132 of the IT Act was carried on 09.12.2005 on the residential premises of the assessee at B-26, Swasthya Vihar, New Delhi and also at the business premises of M/s. Neha Jewellers Pvt. Ltd. at 1170 Kucha Mahajani Chandani Chowk, Delhi in which the assessee is a director. Certain materials were found during the search proceedings, on the basis of which, the Assessing Officer made addition of Rs.2,04,80,000/- to the income of the assessee and initiated the penalty proceedings u/s. 271((1)(c) of the Act. In the quantum appeal before the first appellate authority, the ld. CIT(A) restricted the addition to the extent of Rs.52,77,574/- on account of contribution made to Chits by taking peak entry in the diary seized in the search. Based on the sustenance of this addition by the ld. CIT(A), the AO imposed a penalty u/s. 271(1)(c) of Rs.17,76,431/- representing 100% of the tax sought to be evaded.
Aggrieved by the penalty order, the assessee preferred appeal before the first appellate authority, who confirmed the penalty stating that there was clear attempt by the assessee to hide the actual transactions from the eyes of the department by not recording the same in the books of account.
During the course of hearing, the ld. AR submitted that in the quantum proceedings, the addition sustained by the ld. CIT(A) has been deleted by the ITAT in ITA No. 4995/Del./2010 and CO No. 147/Del./2014 for the assessment year 2005-07 vide order dated 20.06.2016. Therefore, there remains no justification to sustain the impugned penalty. The ld. DR, on the other hand, relied on the order of the ld. CIT(A).
We have heard both the sides and perused the entire material available on record and we find that the addition on the basis of which the penalty has been imposed stands deleted by Co-ordinate Bench in ITA No. 4995/Del./2010 and CO No. 147/Del./2014 vide order dated 20.06.2016.
Therefore, once the very basis for imposition of penalty stands collapsed, there remains no justification to impose or sustain the penalty u/s. 271(1)(c) of the Act. Accordingly, the appeal of the assessee deserves to be allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 07.04.2017.