Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH “E”: NEW DELHI
Before: SHRI H.S. SIDHU & SHRI ANADI N MISHRA
This appeal filed by the assessee is directed against the order of the CIT(A)-XX, New Delhi dated 3.2.2014 for A.Y 2003-04. The grounds of appeal are as under :-
“6.1 Ground 1: That the Learned Commissioner of Income-tax (Appeal) - XXI Learned Assessing Officer - Circle 6(1), New Delhi (hereinafter referred to as "the Learned CIT(A)" and "the learned AO") has erred in facts and law by subjectively concluded that the Appellant has furnished inaccurate 1 particulars of income in order to evade taxes, and has thereby erred in levying penalty under section 271(1)(c) of the Act without affording adequate opportunity of being heard thus violating the well-established principles of natural justice. Thus, the penalty order issued is bad in law and void ab initio. 6.2 Ground 2:That the Learned CIT(A)I learned AO has erred on facts and circumstances which were germane of the instant case that disallowance I additions made during scrutiny assessment proceedings were merely on account of difference in opinion on certain contentious issues and not on account of any deliberate misrepresentation of facts or furnishing of inaccurate particulars by the Appellant. 6.3.Ground 3:That the Learned CIT(A)/learned AO has failed to appreciate that the Appellant has acted in bona fide intentions and has made full and correct disclosure in the books of accounts, return of income, tax audit report and financial statements. 6.4. Ground 4: That the Learned CIT(A)/Learned AO has erred in law and has failed to appreciate that mere disallowance of certain expenses during the course of scrutiny assessment proceedings do not ipso facto attract imposition of penalty under section 271(1)(c), unless the Appellant is shown to have deliberately furnished any inaccurate particular of income I expense (having result of evasion of taxes). The Learned CIT(A)/Learned AO has failed to discharge his statutory duty to show / prove that the Appellant has deliberately concealed any particulars of its income / expense or furnished inaccurate particulars. 6.5. Ground 5: That the Learned CIT(A)/ Learned AO erred in facts and circumstances of the case by not appreciating that penalty cannot be levied on the disallowances unless the Appellant is shown to have deliberately furnished any inaccurate particular of income/expense (having result of evasion of taxes).
All the grounds of appeal are related to penalty levied by Ld. AO amounting to Rs. 16,51,000/- and are taken up together for the sake of convenience. Assessment order was passed by the Ld. AO vide order dated 27.3.2006 u/s 143(3) of Income Tax Act. In the asstt. order, additions were made including addition on account of transfer pricing adjustments amounting to Rs. 44,89,948/-. Penalty proceedings u/s 2 271(1)(c) of I.T. Act were also initiated by the Ld. AO. Order levying penalty u/s 271(1)(c) of I.T. Act was passed by the AO vide order dated 25.3.2011 wherein penalty amounting to Rs. 1650055/- in respect of transfer pricing adjustments amounting to Rs. 4489948/-.
No penalty was levied in respect of remaining additions. The assessee is in appeal before ITAT against levy of aforesaid penalty u/s 271(1)(c) of I.T. Act, amounting to Rs. 1650055/-, u/s 271(1)(c) of I.T. Act.
In the course of hearing before us, the assessee was represented by Shri Rohit Tiwari, Ld. AR and revenue was represented by Shri U.C. Dubey, Ld. Sr. DR. We have heard both sides carefully. We have also perused the material on record. Ld. AR of the assessee brought to our notice that the addition of Rs. 4405505/- in respect of which penalty amounting to Rs. 1651000/- was levied by the Ld. AO has been deleted by ITAT vide order dated 12.4.2016 in ITA No. 961/Del/2010.
In view of the above, the Ld. AR for assessee pleaded that penalty should be deleted. Ld DR agreed that the addition on the basis of which penalty u/s 271(1)(c) has been levied, has been deleted by the ITAT. However, he relied on the order of the Ld. AO. As the quantum of addition (transfer pricing adjustments amounting to Rs. 4405505) on the basis of which penalty amounting to Rs. 1651000/- was levied u/s 271(1)(c) of I.T. Act, has been deleted by ITAT, penalty levied u/s 271(1)(c) of ITAT has no legs to survive. Therefore we cancel the penalty u/s 271(1)(c) of I.T. Act and allow the appeal of the assessee.
For coming to this conclusion, we derive support from decision of Hon’ble Supreme Court in the case of K.C. Builders vs. ACIT (2004) 135 Taxman 461 (SC) in which Hon’ble Apex Court held that where an order of assessment or reassessment on the basis of which penalty has been levied on the assesse has itself been finally set aside or cancelled by the Tribunal or otherwise, the penalty cannot stand by itself and is liable to be cancelled.
In the result this appeal is allowed.
Order pronounced in open court on 9th August, 2016.