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Facts
The Revenue appealed against an order deleting a penalty. The original assessment order had made a substantial addition, which was partially confirmed by the CIT(A). Subsequently, the Tribunal deleted the entire addition.
Held
The Tribunal held that since the additions forming the basis for the penalty were deleted by a previous order, the penalty itself had no foundation and must also be deleted. The penalty was levied under section 271(1)(c) of the Income-tax Act, 1961.
Key Issues
Whether the penalty levied under section 271(1)(c) can sustain when the additions on which it was based have been deleted?
Sections Cited
271(1)(c), 143(3), 50C
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Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLE & SHRI SUNIL KUMAR SINGH, HONBLEShri M. Subramanian
O R D E R PER NARENDRA KUMAR BILLAIYA (AM)
This appeal filed by the Revenue is preferred against the order dated 26.06.2023 by National Faceless Appeal Centre, Delhi [hereinafter in short “Ld. CIT(A)”] pertaining to A.Y. 2009-10.
(A.Y: 2009-10) RONAK MARBLES INDUSTRIES 2. The sum and substance of the grievance of the revenue is that the Ld. CIT(A) / National Faceless Appeal Centre, Delhi, 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 dated 21.02.2014 framed under section 143(3) of the Act in which the Assessing Officer made the addition at ₹.5,00,38,800/-. The assessment was challenged before Ld. CIT(A) and the Ld. CIT(A) gave partial relief to the assessee by confirming the addition to the extent of 65%. Both the assessee and the revenue approached this Tribunal and this Tribunal vide order dated 14.03.2017 in and ITA No. 3045/MUM/2016 deleted the entire addition, the relevant findings of the Coordinate Bench read as under: -
“After considering the facts of the case in the light of the ratio laid down by the Hon‘ble Jurisdictional High Court and others including the decisions of the Coordinate Benches of the Tribunal, we are of the considered view that the order of FAA upholding partly the order of AO levying tax on the LTCG on the basis of development agreement was wrong and cannot be sustained. Accordingly, we set aside the order of the FAA and direct the AO to delete the total addition in the current year. We further hold that the application of provisions of section 50C is also bad in the present scenario as there was no transfer of land or building has taken place. Accordingly, the appeal of the assessee is allowed.”
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(A.Y: 2009-10) RONAK MARBLES INDUSTRIES 4. Since the additions has been deleted by the Coordinate Bench, the penalty so levied does not have any legs to stand and since the foundation has been removed the superstructure must fall and the Assessing Officer is directed to delete the penalty. In the result, appeal filed by the revenue is dismissed.
In the result, appeal filed by the revenue is dismissed.
Order pronounced in the open court on 15th April, 2024.