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Income Tax Appellate Tribunal, DELHI BENCHES: D: NEW DELHI
Before: SHRI N.K. SAINI & SHRI LALIET KUMAR
This appeal has been filed by the revenue against the order dated 29/11/2013 passed by the ld. CIT(A)-XXVII, New Delhi for the A.Y. 2008-09, wherein the revenue has raised following grounds of appeal:
“1. On the facts and in the circumstances of the case, the order of the Ld. CIT(A) is bad in law and not in consonance with facts of the case.
2. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in deleting penalty of Rs.24,60,258/- @ 300% on an addition of Rs. 36,19,091/- under deeming provisions of section 50C of the I.T. Act.
3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in restricting penalty to Rs. 19,395/-(100% of the tax sought to be evaded) out of Rs. 58,184/- (300% of the tax sought to be evaded) imposed by the AO on account of interest paid on car loan under the head income from house property.
4. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in considering appellant submission that due to clerical error interest on car loan was shown under the head income from house property in place of income from business.
5. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in passing the order without considering the order passed by the AO."
The assessee had filed its return of income on 31/07/2008, which was processed U/s 143(1) of the Income Tax Act, 1961 (in short the Act). Later on the assessment was completed under section 143(3) of the Act at an income of Rs. 1,79,04,967/- as against the returned income of Rs. 1,42,03,960/-. During the course of assessment proceedings, it was seen that the assessee has shown long term capital gain of Rs. 35,98,717/- in his ITR. The assessee has undervalued the sale consideration and therefore for the purpose of section 50C of the IT Act the value adopted by the stamp valuation authority shall be deemed to be the full value of the consideration received as a result of such transfer and in accordance to this an addition of Rs. 36,19,091/- was made U/s 50C of the Act and also an addition of Rs. 57,069/- was made on interest on housing loan and the same was added to the income of the assessee. The said finding in the assessment order has was confirmed by the ld. CIT(A).
Since the assessee had furnished inaccurate particulars of its income, penalty proceedings U/s 271(1)(c) of the IT Act were initiated at the time of completion of assessment proceedings. A notice U/s 274/271 was issued to the assessee for levying penalty U/s 271(1)(c) of the Act on 30/12/2010 fixing the case for 06/01/2011 and was duly served upon the assessee.
However, the penalty proceedings were kept in abeyance as the assessee had preferred an appeal before the ld. CIT(A), which has since been deleted. A fresh show cause notice was issued on 10/05/2012 fixing the case on 17/05/2012. In response to the said notice, the assessee had sought adjournment which was accordingly granted for 25/05/2012 and on that date, the assessee appeared and filed his written submissions, which was not found convincing to the A.O. and she observed that the assessee has committed a brazen violation of the statutory mandate upon him and is therefore liable for the maximum penalty of Rs. 25,18,440/- @ 300%, which is levied on the assessee.
Being aggrieved by the order of the A.O., the assessee carried the matter before the ld. CIT(A), who had deleted the penalty order of the A.O. by following the decision of the Hon’ble Calcutta High Court in the case of CIT Vs Madan Theatres Ltd. in of 2013 dated 14th May, 2013 and held that it cannot be held that the appellant had concealed particulars of income or furnished inaccurate particulars of his income based on the deeming provisions of Section 50C of the Act as there is no finding in the penalty order that the appellant had received any amount in excess of the sale consideration stated in the sale document. Therefore, penalty of Rs. 24,60,258/- levied by the A.O. on the addition of Rs. 36,19,091/- based on the deeming provisions of Section 50C is deleted.”
Now the revenue is in appeal before us. The ld. Sr.DR has vehemently relied on the orders of the authorities below.
At the outset, the ld AR of the assessee has brought to our notice that the Tribunal vide order dated 27/1/2016 has deleted the quantum addition made by the A.O. and therefore, penalty imposed by the ld AO and confirmed by the ld. CIT(A) are also required to be deleted as the sole basis for imposing the penalty was the addition made by the A.O. while passing the assessment order.
We have heard the rival contentions of both the parties and perused the material available on the record. It is an admitted position that the Tribunal vide order dated 27/1/2016 has deleted the quantum addition made by the A.O. and confirmed by the ld. CIT(A). In our view, the penalty, which was imposed by the A.O. { deleted by the ld. CIT(A) } is required to be deleted as the sole basis of imposing the penalty was the addition made by the AO under the deeming provisions of Section 50C of the Act.
Moreover, in view of the judgment of the Hon’ble Calcutta High Court in the case of CIT Vs. Madan Theaters (supra), the imposition of penalty is not called for. By respectfully following the judgment of the Hon’ble Calcutta High Court (supra) and more particularly in view of the fact that the addition had already been deleted, we do not find any ground sustainable in the eyes of law by the revenue, therefore, the penalty imposed by the A.O. and confirmed by the ld. CIT(A) is deleted.
In the result, the appeal of the revenue is dismissed.
The order pronounced in the open court on 01/12/2016.