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Income Tax Appellate Tribunal, MUMBAI BENCHES “H”, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the assessee. The relevant assessment year is 2006-07. The appeal is directed against the order of the Commissioner(Appeals)-28 at Mumbai and arises out of the penalty order u/s 271(1)(c) of the Income Tax Act, 1961 (here-in-after ‘the Act’).
In a nutshell, the material facts are that during the course of assessment, the Assessing Officer (AO) was not convinced with the explanation given by the assessee with regard to purchases of cloth of Rs. 18,83,061/- from M/s Divya Fabrics and Rs. 16,96,163/- from M/s N.M.Corporation and thus made an addition of Rs.35,79,224/- to the total income of the assessee. Then the AO imposed a minimum penalty of Rs.10,95,242/- u/s 271(1)(c) on the above amount. The ld. CIT(A) confirmed the above penalty imposed by the AO. Thus the assessee is in appeal before us against the above order of the ld. CIT(A).
We have heard the rival submission and perused the relevant material on record. We find that the above addition of Rs.35,79,224/- made by the AO has been deleted by the ITAT “B” Bench, Mumbai (ITA No. 4766/Mum/2011). We produce below the relevant portion of the said order.
“ We are of the considered view that the CIT(A) erred in confirming and sustaining the addition of Rs.35,79,224/- to the income of the assessee-firm on account of purchases made by the assessee-firm from M/s Divya Fabrics and M/s N M Corporation as made by the AO in the assessment order and we delete the additions of Rs.35,79,224/- made by the AO and as confirmed/sustained by the CIT(A) to the income of the assessee-firm. We order accordingly.”
It has been held by the Hon’ble Supreme Court in K. C. Builders v. ACIT (2004) 265 ITR 562,569 (SC) that where the additions made in the assessment order, on the basis of which penalty for concealment was levied, are deleted, there remains no basis at all for levying the penalty for concealment and, therefore, in such a case no such penalty can survive and the same is liable to be cancelled.
In view of the above, the penalty of Rs. 10,95,242/- confirmed by the ld. CIT(A) is cancelled.
In the result, the appeal is allowed.