MGF DEVELOPMENT LTD.,NEW DELHI vs. ACIT, NEW DELHI

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ITA 2492/DEL/2012Status: DisposedITAT Delhi06 December 2016AY 2008-093 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 Hon'ble Delhi High Court deleted the entire transfer pricing addition, the basis for imposing the penalty no longer exists. Therefore, the penalty imposed is ordered to be deleted.

What were the facts?

The Assessing Officer (AO) made a transfer pricing addition of Rs. 8,33,86,859. The CIT(A) restricted this addition to Rs. 7,03,05,000. Based on this sustained addition, the AO imposed a penalty under Section 271(1)(c).

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the underlying addition on which it was imposed has been deleted 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 BENCHES : D : NEW DELHI

Before: SHRI R.S. SYAL & MS SUCHITRA KAMBLE

For Appellant: Ms Varsha Bhattacharya, CA
For Respondent: Dr. Balwan Chauhan, CIT, DR
Hearing: 26.10.2016Pronounced: 27.10.2016

ORDER PER R.S. SYAL, AM:

This appeal by the assessee arises out of the order passed by the CIT(A) on 18.2.2014 in relation to the assessment year 2003-04.

2.

Briefly stated, the facts of the case are that the AO made an addition amounting to Rs.8,33,86,859/- on account of transfer pricing.

The ld. CIT(A) restricted such addition in quantum appeal to Rs.7,03,05,000/-. It is on the sustenance of addition to this extent that the AO imposed penalty u/s 271(1)(c) of the Act amounting to Rs.2,58,40,000/-

3.

After considering the rival submissions and perusing the relevant material on record, it is noticed that the assessee challenged the addition in quantum before the Hon’ble Delhi High Court. Vide its judgment dated 30.10.2015, the Hon’ble Delhi High court has deleted the transfer pricing addition amounting to Rs.8.33 crore. In view of the fact that the very foundation for the imposition and confirmation of penalty, being the addition made in quantum proceedings, does not stand, there can be no question of imposing or confirming any penalty thereon. We, therefore, order for the deletion of penalty.

4.

In the result, the appeal is allowed.

The order pronounced in the open court on 27.10.2016.

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