HANUMAN STEEL WIRES PVT. LTD.,KOLKATA vs. I.T.O., WARD - 3(3), KOLKATA, KOLKATA

The brief facts are that the assessee filed its return of income declaring a loss of Rs.25,70,481/-. The Assessing Officer in the assessment carried out u/s 143(3) of the Act made the addition of Rs.1,10,00,000/- on account of unexplained share capital and share premium vide order dated 21.03.2015. Penalty proceedings were initiated u/s 271(1)(c) of the Act and the impugned penalty was imposed. In the quantum proceedings, the ld. CIT(A) confirmed the addition so made by the Assessing Officer. In appeal against the levy of penalty, the ld. CIT(A) confirmed the penalty so levied by the Assessing Officer u/s 271(1)(c) of the Act. In the meanwhile, the assessee Assessment Year: 2012-13 Hanuman Steel Wires Pvt. Ltd.

preferred appeal before the Income Tax Appellate Tribunal. The Tribunal vide order dated 19.06.2018 passed in restored the entire matter to the file of the Assessing Officer for afresh assessment order. Thereafter, in the fresh assessment proceedings, the addition was restricted to Rs.32,00,000/-. Thereafter, an application u/s 154 of the Act was moved by the assessee to the Assessing Officer pleading that while assessing the income of the assessee, the Assessing Officer had not given set off of returned loss of Rs.25,70,481/-. The contention of the assessee was found correct and the assessee was given the set off of Rs.25,70,481/ and the revised total income of the assessee was assessed at Rs.6,29,519/-.

Now, in the present appeal against the levy of penalty, the ld. Counsel for the assessee has submitted that since the addition of Rs.1,10,00,000/- had been reduced to Rs.32,00,000/- only, therefore, the tax sought to be awaited has also reduced and accordingly, the penalty amount is also liable to be reduced. The ld. Counsel has not advanced any argument on merits but the only submissions is that the penalty levied u/s 271(1)(c) of the Act be accordingly reduced.

We find merit in the above contention of the assessee. The very basis of the impugned penalty is the quantum additions made by the Assessing Officer. Since, the quantum additions have been reduced to Rs.32,00,000/-, therefore, the penalty is also liable to be reduced accordingly, to the extent of tax sought to be awaited. The Assessing Officer has levied the impugned penalty @ 100% of the tax sought to be awaited. We accordingly order that the penalty be reduced taking into consideration the reduced amount of additions at the same rate i.e. @ 100% of the tax sought to be awaited.

In the result, the appeal of the assessee is treated as partly allowed.