DCIT CIR 7(2)(1), MUMBAI vs. METRO EXPORTS P.LTD, MUMBAI

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ITA 3542/MUM/2015Status: DisposedITAT Mumbai22 July 2016AY 2006-073 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal affirmed the CIT(A)'s decision to delete the penalty. It held that since the original addition on which the penalty was based no longer survived, the penalty also could not be sustained.

What were the facts?

The Assessing Officer levied penalty under section 271(1)(c) for disallowance of long-term capital loss. The CIT(A) deleted the penalty because the quantum addition was subsequently set-aside by the ITAT.

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the underlying addition to income has been deleted. The separation of penalty proceedings from assessment proceedings.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “I”, MUMBAI

Before: SHRI G.S.PANNU& SHRI AMARJIT SINGH.

For Appellant: Shri A.K.Kardam
For Respondent: Shri Piyush Chhajed
Hearing: 19/07/2016Pronounced: 22/07/2016

ORDER PER G.S.PANNU, A.M: The captioned appeal filed by the Revenue pertaining to assessment year 2006-07 is directed against an order passed by CIT(A)- 13, Mumbai dated 19/03/2015 which in turn arises out of an order passed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’) dated 28/03/2014.

2.

In this appeal, the Revenue has raised the following Ground of appeal:-

“On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty under section 271(1)(c) of the Act of Rs.31,30,313/- merely on the ground that the quantum addition was deleted by the ITAT, instead of deciding the appeal on merits, because the penalty proceedings are separate from the assessment proceedings.”

3.

In this case, the respondent assessee is a company incorporated under the provisions of the Companies Act, 1956, and is, inter-alia, engaged in the business of manufacturing and export of garments and bicycle and other items. In the assessment finalized under section 143(3) of the Act dated 15/12/2008, one of the additions made to the returned income was on account of disallowance of long term capital loss on sale of preference shares of M/s. PAKS Veterinary Drugs Mfg. Co. Pvt. Ltd. Subsequently, the Assessing Officer levied penalty under section 271(1)(c) of the Act with respect to the tax sought to be evaded on the above stated income. By way of the impugned order, the CIT(A) has deleted the levy of penalty on the ground that in the quantum assessment proceedings, the impugned disallowance made by the Assessing Officer has since been set-aside by the Tribunal vide its order in dated 3/02/2015. Against such a decision, Revenue is in appeal before the Tribunal.

4.

Before us, it was a common point between the parties that the order of the Tribunal dated 03/02/2015(supra) continues to hold the field and, therefore, no error can be found in the order of the CIT(A) deleting the penalty imposed under section 271(1)(c) of the Act as the addition made by the Assessing Officer itself does not survive Thus, on this aspect, the order of the CIT(A) is affirmed and Revenue fail in its appeal.

5.

In the result, appeal of the Revenue is dismissed.

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