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Facts
Following a search, the Revenue completed the assessment and initiated penalty proceedings for concealment of income. The CIT(A) deleted the additions and consequently deleted the penalty. The Revenue appealed against the deletion of penalty by the CIT(A).
Held
The Tribunal held that since the quantum additions were deleted by the CIT(A), there was no basis for concealed income or inaccurate particulars, and thus the penalty u/s 271(1)(c) could not survive. Consequently, the order of the CIT(A) deleting the penalty was upheld.
Key Issues
Whether penalty under Section 271(1)(c) can be sustained when the underlying addition on account of concealed income has been deleted by the appellate authority.
Sections Cited
271(1)(c), 144, 153A, 143(3), 69A, 154, 250
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Income Tax Appellate Tribunal, DELHI “A” BENCH: NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI MANISH AGARWAL
ORDER PER MANISH AGARWAL, AM : Both the captioned appeals are filed by the Revenue against the separate orders, both dated 05.05.2025 by Ld. Commissioner of Income Tax (A), Delhi-31 [“Ld.CIT(A)”] u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of the penalty order dated 26.08.2016 passed u/s 271(1)(c) of the Act for AY 2011-12 and penalty order dated 31.08.2016 passed u/s 271(1)(c) of the Act for AY 2012-13.
As these captioned appeals filed by the Revenue are having common issue of deletion of penalty levied u/s 271(1)(c) of the Act therefore, these two appeals filed by the Revenue are decided by a common order.
Year : 2011-12] 4. Brief facts of the case are that in this case consequent to the search, assessment was completed at a total income of INR 10,10,00,000/- vide assessment order dated 30.03.2016 passed u/s 144/153A r.w.s. 143(3) of the Act and initiated the penalty proceedings u/s 271(1)(c) for concealment of income in respect of the addition of Rs. 10,10,00,000/- made u/s 69A of the Act. Being aggrieved with the addition made, the appellant had filed an appeal before the ld. CIT(A) who deleted the additions vide order dated 24.03.2025 in Appeal No. CIT(A), Delhi-35/10395/2019-20. In the meantime, AO completed the pending penalty proceedings and levied the penalty of Rs. 7,21,31,801/- for concealment of income which was reduced to Rs. 3,35,49,675/- in terms of the rectification order passed u/s 154 of the Act on 31.08.2016.
Against the said order of penalty, assessee filed an appeal before Ld. CIT(A) who vide order dated 05.05.2025, allowed the appeal of the assessee and deleted the penalty by observing that since the addition is deleted, penalty u/s 271(1)(c) does not survived.
Aggrieved by the order of Ld.CIT(A), Revenue is in appeal before the Tribunal by taking following grounds of appeal:-
1. “On the facts and circumstances of the case, the Ld. CIT(A) has erred in cancelling the penalty of Rs. 3,35,49,675 which was imposed u/s 271(1)(c) of the IT Act, 1961.
2. The Ld. CIT(A) has erred in deleting the penalty without appreciating the facts that addition of Rs. 10,10,00,000/- was made, as the assessee during the course of assessment proceedings has not responded to the Page | 2 various notices issued while passing the assessment order and hence failed to discharge its onus for explaining the genuineness of transaction.
On the facts and circumstances of the case the Ld. CIT(A) erred in deleting the penalty which imposed on quantum addition of Rs. 10,10,00,000/- by not appreciating the facts that AO in its assessment order has clearly stated that during the post search inquiries, Yamuna Express Way Industrial Development Authority (YEIDA) has confirmed the above said payment made by the assessee company to them.
On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the penalty as while making quantum addition in the case of assessee was completed ex-parte and Ld. CIT(A) has not given opportunity to the AO for examining the books of the assessee and further treatment of payment made to YEIDA by the third party (M/s Sidh Automobiles Ltd.) on behalf of the assessee.
5. The appellant craves leave to add, alter OR amend any/all of the grounds of appeal before OR during the course of the hearing of E the appeal.
Heard the contentions of both parties and perused the material available on record. It is seen that the quantum additions made by the AO in the instant case were deleted by ld. CIT(A) vide its order dated 24.03.2025 in Appeal No. CIT(A), Delhi-35/10395/2019-20. Ld. CIT(A) while deleting the penalty u/s 271(1)(c) of the Act has taken note of this fact. Since after the order of CIT(A) deleting the additions made, no income remained which could be held as concealed income or for which the assessee had furnished inaccurate particulars of income. Therefore, we find no error in the order of Ld. CIT(A) in deleting the penalty. Accordingly, we uphold the order of Ld. CIT(A). Accordingly, all the grounds of appeal of the revenue are dismissed.
In the result, appeal of the Revenue is dismissed.
[Assessment Year : 2012-13] 9. Now we take up the appeal of Revenue in for Assessment Year 2012-13.
Heard the contentions of both parties and perused the material available on record. In this appeal, facts are similar and identical to the facts of revenue’s appeal in Assessment Year 2011-12 where we have confirmed the order of ld. CIT(A) deleting the penalty levied u/s 271(1)(c) of the Act. IN this year also the quantum addition made on which penalty is levied are deleted by ld. CIT(A) vide order dated 24.03.2025 in Appeal No. CIT(A),Delhi-35/10060/2019-20. Thus, by respectfully following the observations made in revenues’ appeal for AY 2011-12 herein above, which are applied Mutatis Mutandis to the facts of case under consideration, appeal filed by the Revenue is dismissed. Accordingly, all the grounds of appeal of the revenue are dismissed.
In the result, appeal of the Revenue is dismissed.
In the final result, both the appeals of the Revenue in & 4313/Del/2025 [Assessment Years 2011-12 & 2012-13] are dismissed. Order pronounced in the open Court on 24.11.2025.