M/S. DREAM BUIDCON PVT. LTD.,NEW DELHI vs. DCIT, NEW DELHI

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ITA 3216/DEL/2013Status: DisposedITAT Delhi24 February 2016AY 2006-073 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty cannot survive as the very foundation for its imposition, the addition under Section 68, has ceased to exist due to its deletion in quantum proceedings.

What were the facts?

The assessee's appeal concerns a penalty imposed under Section 271(1)(c) for AY 2006-07. The penalty was based on an addition made by the AO under Section 68, which was later deleted by the CIT(A) in quantum proceedings.

What were the issues?

Whether a penalty under Section 271(1)(c) can be sustained when the underlying addition that formed the basis for the penalty has been deleted in quantum proceedings.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES : B : NEW DELHI

Before: SHRI R.S. SYAL, AM & SHRI A.T. VARKEY, JM

For Appellant: Shri Sudesh Garg, Advocate, Shri Sunil Chander Sharma, CIT,DR
Hearing: 24.02.2016Pronounced: 24.02.2016

This appeal by the assessee is directed against the penalty order passed by the CIT(A) on 05.02.2013 upholding the penalty of Rs.21,49,393/-imposed by the AO u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2006-07.

2.

We have heard the rival submissions and perused the relevant material on record. It is noticed that the AO made addition of Rs.63,79,500/- u/s 68 of the Act in respect of three creditors. The said addition was confirmed in the first appeal.

When the matter came up before the Tribunal in quantum proceedings, the issue was restored to the file of CIT(A), vide order dated 2nd July, 2014, in ITA No.4654/Del/2009. A copy of this order is placed at page 10 of the paper book. While giving effect to this Tribunal order, the ld. CIT(A), vide his order dated 2.9.2014 has deleted the said addition u/s 68 amounting to Rs.63,79,500/-. Nothing has been brought on record to demonstrate that this order passed by the ld. CIT(A) deleting the addition in quantum proceedings has been assailed in further appeal. In view of the fact that the very foundation for the imposition of the instant penalty ceases to exist with the final deletion of addition in quantum proceedings by the ld. CIT(A), we are of the considered opinion that the extant penalty can’t survive. We, therefore, order for the deletion of penalty.

3.

In the result, the appeal is allowed.

Order Pronounced in the open Court on 24.02.2016.

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