ALLIANCE HOTELS,MUMBAI vs. DCIT 12(1), MUMBAI

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ITA 2285/MUM/2017Status: DisposedITAT Mumbai25 October 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 disallowances forming the basis of the penalty proceedings were subsequently deleted by the Tribunal in the quantum appeal, the penalty levied under Section 271(1)(c) no longer survives.

What were the facts?

The Assessing Officer levied a penalty under Section 271(1)(c) based on disallowances for depreciation not supported by bills and interest on bank loans not used for fixed assets. The assessee appealed against these disallowances.

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the additions forming the basis of the penalty have been deleted in appeal.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3)

AI-generated summary — verify with the full judgment below

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

Before: SHRI G.S.PANNU & SHRI SAKTIJIT DEY

For Appellant: Shri Ramawatar Mandhania
For Respondent: Shri Rajesh Kumar Yadav
Hearing: 11/10/2017Pronounced: 25/10/2017

ORDER PER G.S.PANNU,A.M:

The captioned appeal by the assessee is directed against the order of CIT(A)-28, Mumbai dated 11.01.2017, pertaining to the Assessment Year 2009-10, which in turn has arisen from the order passed by the DCIT, Circle-12(1), Mumbai dated 29.03.2014 under section 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’).

2.

In brief, the relevant facts are that the Assessing Officer in the assessment finalised u/s 143(3) of the Act on 20.12.2011 has disallowed expenditure on the following two counts (i) depreciation not supported by bills and vouchers – Rs.69,13,144/- and (ii) interest on bank loan not used for acquisition of fixed assets – Rs.1,08,04,969/- and had initiated separately the penalty proceedings u/s 271(1)(c) of the Act. Not being satisfied with the explanation submitted by the assessee to the show cause notice dated 28.02.2014, the Assessing Officer levied penalty of Rs.60,22,390/- being 100% of the tax sought to be evaded on the above two aspects. Even the CIT(A) has affirmed the levy of penalty. Against such a decision of the CIT(A), assessee is in further appeal before us.

3.

At the time of hearing, the learned representative for the assessee pointed out that the assessee’s appeal against the disallowance of expenditure in the quantum proceedings has been decided in favour of the assessee by the Tribunal vide its order in dated 08.11.2016. Further, it has also been submitted the Assessing Officer has an passed order dated 27.02.2017 giving effect to the Tribunal’s order, therefore, the additions on the basis of which the penalty has been levied u/s 271(1)(c) do not survive.

4.

The ld. DR did not oppose the factual matrix brought out by the learned representative for the assessee.

5.

We have heard the rival submissions. We find that the disallowances on the basis of which the penalty proceedings were initiated have been deleted by the Tribunal vide its order in dated 08.11.2016. Therefore, the penalty levied u/s 271(1)(c) of the Act does not survive and is hereby deleted.

6.

In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 25th October, 2017.

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