ITO 9(2)(3), MUMBAI vs. COSMOS BRAND DISTRIBUTORS P. LTD, MUMBAI

आदेश / O R D E R Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 29/05/2015 of Ld. Commissioner of Income Tax, Mumbai deleting penalty under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter the Act). 2. During hearing Shri Rajesh Ojha, learned D.R. contended that consequent upon deleting the addition by the Tribunal, the learned CIT(A) deleted the penalty. On the other hand, none was present for the assessee in spite of issuance of notice under registered AD on 01.07.2016. The assessee neither presented itself nor moved any adjournment petition. It seems that the assessee has nothing to say, therefore, I have no option but to proceed ex-parte, qua the assessee and tend to dispose of this appeal on the basis of material available on record. 3. I have considered the submissions of the learned D.R. and perused the material available on record. The facts in brief are that the assessee declared loss of Rs.2,14,46,185/- in its return filed on 30.11.2006. The case of the assessee was selected for scrutiny and an ex- parte assessment under section 144 of the Act was completed at an income of Rs.20,85,470/- wherein various additional and disallowances were made. The assessee filed appeal before the learned CIT(A) and ex-parte order was passed for non-attendance of the assessee. The assessee

M/s. Cosmos Brand Distributors Pvt. Ltd. carried the matter in appeal before the Tribunal wherein vide order in directed the learned CIT(A) to re-adjudicate the appeal. In the meantime the Assessing Officer passed the order on 27.02.2011 levying penalty in respect of various additions and disallowances. The learned Assessing Officer finally levied penalty with respect disallowance of unsecured loans which were made under section 68 of the Act. The learned CIT(A) while disposing of the appeal of the assessee considered the arguments and found that since the Tribunal has restored the quantum appeal and directed the CIT(A) to re- adjudicate the quantum appeal and accordingly pursuant to the directions of the Tribunal the appeals were revived for re-adjudication and finally vide order dated 29.05.2015 the addition was found unsustainable and accordingly deleted. The learned CIT(A) cancelled the penalty also. The Revenue is aggrieved and is in appeal before this Tribunal. 3.1 Under the facts narrated herein above, I am of the view that penalty imposed u/s 271(1)(c) will not survive. My view find support from the decision in K.C. Builders vs ACIT (2004) 265 ITR 562 (SC) and the ratio laid down in CIT vs S.P. Viz, 176 ITR 76 (Patna). Even otherwise, when the quantum addition is deleted, there remains no basis at all for levying the penalty for concealment or furnishing inaccurate particulars. The penalty cannot stand on its legs when addition on the basis of which the penalty was imposed remains no more in existence, thus, I upheld the stand of the M/s. Cosmos Brand Distributors Pvt. Ltd. learned CIT(A), consequently the appeal of the Revenue is dismissed.

This order was pronounced in the open court in the presence of Ld. D.R. at the conclusion of the hearing on 15/07/2016.