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Facts
The appeals by the revenue and the cross-objection by the assessee were heard together. The revenue's grievance was that the CIT(A) wrongly deleted the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961. The penalty was levied following an assessment order under section 143(3) r.w.s. 153A after a search operation.
Held
The Tribunal held that the additions made by the Assessing Officer, which formed the basis for levying the penalty, had been deleted by the Tribunal in earlier appeals for various Assessment Years. Since the foundation for the additions was removed, the penalty levied could not stand, and the CIT(A)'s deletion was justified.
Key Issues
Whether the penalty levied under section 271(1)(c) is valid when the additions forming the basis of the penalty have been deleted by the Tribunal.
Sections Cited
271(1)(c), 143(3), 153A, 56(2)(viib)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLE & SHRI SANDEEP SINGH KARHAIL, HONBLE
, 539, 540 & 541/MUM/2024 CO No. 63/MUM/2024 Avinash Bhosale Infrastructure Pvt. Ltd., Avinash Nivrutti Bhosale O R D E R PER NARENDRA KUMAR BILLAIYA (AM) are four separate appeals by the revenue preferred against order of the Learned Commissioner of Income Tax (Appeals)–48, Mumbai [hereinafter in short “Ld.CIT(A)”] pertaining to A.Ys. 2014-15, 2015-16, 2011-12 and 20019-10 respectively. CO No. 63/MUM/2024 is cross objection by the assessee preferred against order of the Ld. CIT(A) pertaining to A.Y.2014-15.
The appeals and the cross objection were heard together and are disposed off by this common order, for the sake of convenience and brevity.
The common grievance in the appeals of the revenue is that the Ld. CIT(A) erred in deleting the Penalty levied by the Assessing Officer under section 271(1)(c) of Income-tax Act, 1961 (in short “Act”).
The roots for the levy of Penalty lie in the assessment order framed under section 143(3) r.w.s. 153A of the Act pursuant to search and seizure operation conducted at the business and residential , 539, 540 & 541/MUM/2024 CO No. 63/MUM/2024 Avinash Bhosale Infrastructure Pvt. Ltd., Avinash Nivrutti Bhosale premises of ABIL Group on 21.07.2017. The assessment was completed after making addition on account of share premium on issue of equity and preference shares.
The quarrel relating to the quantum addition travelled up to the Tribunal and the Tribunal in A.Y. 2014-15 in and in A.Y. 2011-12 and 2015-16 in ITA No. 529 & 530/MUM/2021 and in A.Y. 2009-10 and 2011-12 in ITA No. 528 & 531/MUM/2021 has deleted the additions made by the Assessing Officer.
Since the very foundation has been removed by the Tribunal the penalty levied under section 271(1)(c) of the Act does not have any legs to stand and the Ld. CIT(A) has rightly deleted the penalty so levied by the Assessing Officer and this deletion do not call for any interference. Therefore, the captioned appeals by the revenue are dismissed.
Coming to the CO No. 63/MUM/2024 (A.Y. 2014-15) the assessee is aggrieved by the penalty levied on the disallowance of bank charges of ₹.2,36,445/-. A perusal of the order of the Coordinate Bench in dated 18.01.2023 show that the assessee has , 539, 540 & 541/MUM/2024 CO No. 63/MUM/2024 Avinash Bhosale Infrastructure Pvt. Ltd., Avinash Nivrutti Bhosale inter-alia challenged the order of the Ld. CIT(A) / Assessing Officer by raising following grounds in its appeal: - “1. On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in confirming the AO's action of making addition in respect of share premium u/s 56(2)(viib) amounting to Rs.23,70,00,000/- despite the fact that the original assessment u/s 143(3) was completed vide order dated 23.12.2016 and no incriminating material was found or seized during the course of search so as to revisit the assessment originally completed u/s.143(3) for the AY 2014-15.
2. On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in holding the valuation report as incriminating material found during the course of search despite the fact that the said valuation report was already submitted to AO in the course of original assessment proceedings and thus, it cannot considered as an incriminating material found during the course of search.”
The above grounds were challenged on the fact that nothing incriminating was found from the premises of the assessee. Therefore, the ratio laid down by the Hon’ble Bombay High Court in the case of CIT v. Continental Warehousing corporation (Nhavesheva) Ltd., [374 ITR 645] squarely apply. The Coordinate Bench was convinced and allowed the ground of appeal
, which means that the impugned assessment order was treated as non-est. Therefore, all the additions made therein become otiose, which means that the Assessing Officer could not have levy penalty. , 539, 540 & 541/MUM/2024 CO No. 63/MUM/2024 Avinash Bhosale Infrastructure Pvt. Ltd., Avinash Nivrutti Bhosale
9. On the given facts the cross objection is also allowed.
To sum-up, appeals filed by the revenue are dismissed and the cross objection filed by the assessee is allowed.
Order pronounced in the open court on 27th May, 2024