ACIT CIR 6(3)(1), MUMBAI vs. IDEA INTERNATIONAL P. LTD, MUMBAI

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ITA 4916/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 held that since the assessment order giving rise to the penalty was quashed by a previous ITAT order, the deletion of the penalty by the CIT(A) was correct. The penalty cannot survive if the underlying assessment order is invalid.

What were the facts?

The Assessing Officer treated the assessee's gain on sale of shares as business income instead of short-term capital gain and imposed a penalty under Section 271(1)(c). The CIT(A) deleted the penalty because the original assessment order, which led to the addition, had been quashed by the ITAT.

What were the issues?

Whether a penalty under Section 271(1)(c) can be sustained when the assessment order on which it is based has been quashed by the Tribunal.

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 Haridas Bhatt
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)- 12, Mumbai dated 12/06/2015 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 30/03/2014.

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 annulling the penalty order under section 271(1)(c) on disallowance of short Term Capital Gain on sale of Units and shares treating as business income without appreciating the fact that the order of the Hon’ble ITAT quashing the assessment order under section. 143(3) has not been accepted by the department.”

3.

The brief facts are that the respondent assessee is a company incorporated under the provisions of the Companies Act, 1956, and is, inter-alia, engaged in the business of trading of soya seed, soya oil and soya doc and also in the business of manufacturing and distribution of various commodities. In the assessment finalized under section 143(3) of the Act dated 8/12/2008. the Assessing Officer treated the gain declared by the assessee on sale of shares as business income as against short term capital gain declared by the assessee. Subsequently, the Assessing Officer held the assessee guilty of furnishing inaccurate particulars of such income within the meaning of section 271(1)(c) of the Act, thereby imposing a penalty of Rs.17,44,338/- . By way of the impugned order, the CIT(A) has deleted the penalty on the ground that the Tribunal vide its order in dated 26/6/2014 has quashed the assessment order dated 8/12/2008. 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 26/06/2014(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 assessment order giving rise to the addition itself does not survive Thus, on this aspect, the order of the CIT(A) is affirmed and Revenue fail in its appeal.

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