AMIT SABHARWAL,GHAZIABAD vs. ITO, GHAZIABAD

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ITA 3380/DEL/2015Status: DisposedITAT Delhi20 March 2017AY 2009-103 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the additions forming the basis of the penalty were set aside and remitted to the AO for fresh adjudication, the penalty imposed was not sustainable at that juncture. Therefore, the penalty deserves to be quashed.

What were the facts?

The Assessing Officer (AO) made additions to the assessee's income on account of unreconciled differences in receipts and expenses without proper bills. Based on these additions, a penalty was imposed under Section 271(1)(c).

What were the issues?

Whether a penalty imposed under Section 271(1)(c) is sustainable when the underlying additions to income have been set aside by a higher appellate authority.

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, DELHI BENCH ‘C’ NEW DELHI

Before: SHRI I.C. SUDHIR & SHRI L.P. SAHU

Hearing: 28.02.2017Pronounced: 20.03.2017

Per L.P. Sahu, Accountant Member:

1.

This is an appeal by the assessee against the order of ld. CIT(A), Ghaziabad dated 24.02.2015, challenging the penalty imposed by the Assessing Officer u/s. 271(1)(c) of the IT Act, 1961 for the assessment year 2009-10.

2.

The brief facts of the case are that an addition of Rs.21,40,567/- was to the income of assessee on account of the un-reconciled difference in the receipts shown by assessee and that as per 26AS generated by the department. Further addition of Rs.4,00,000/- was by AO on account of expenses debited in the Profit and loss account for want of bills and vouchers.

Based on these additions, the AO imposed penalty of Rs.17,31,200/- representing 200% of the tax sought to be evaded, which was restricted to 100% by the ld. CIT(A) in appeal vide the impugned order. Aggrieved by the impugned order, the assessee is in appeal before the Tribunal.

3.

We have heard both the parties and have gone through the entire material available on record.

4.

At the outset, the ld. AR of the assessee submitted that the above additions, on the basis of which the impugned penalty has been levied, were challenged by the assessee in quantum appeal before the ITAT, and the ITAT vide order dated 05.02.2016 (copy placed on record) was pleased to set aside the additions, remitting them to the file of AO to decide the same de novo after giving reasonable opportunity of being heard to the assessee. Therefore, the penalty so imposed on the basis of above additions, deserves to be quashed.

This situation is admitted to the ld. DR. We are, therefore, of the opinion that once the additions, which led the AO to impose the impugned penalty, stood set aside and restored to the AO, the impugned penalty is not sustainable at this juncture. Accordingly, the appeal of the assessee deserves to be allowed.

5.

In the result, the appeal is allowed.

Order pronounced in the open court on 20.03.2017.

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