SHREE MARUTI POLE INDUSTRIES,BARODA vs. THE INCOME TAX OFFICER,WARD-3(2), BARODA

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ITA 1595/AHD/2014Status: DisposedITAT Ahmedabad12 October 2017AY 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 since the quantum additions were deleted by a previous order, the basis for imposing the penalty under section 271(1)(c) no longer existed. Therefore, the penalty was non est and stood cancelled.

What were the facts?

The assessee filed a return of Nil income, which was selected for scrutiny. The AO made additions and imposed a penalty under section 271(1)(c). The CIT(A) confirmed the penalty. The assessee had previously succeeded in challenging the quantum additions before the Tribunal.

What were the issues?

Whether penalty under section 271(1)(c) can be sustained when the underlying additions to income have been deleted by the appellate authority.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 68,Section 41(1),Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘SMC’

Before: SHRI RAJPAL YADAV

For Appellant: Shri M.K. Patel, AR
Hearing: 11/10/2017Pronounced: 12/10/2017

आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ - अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD – BENCH ‘SMC’

BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER आयकर अपील सं./ ITA No.1595/Ahd/2014 �नधा�रण वष�/Asstt. Year: 2006-2007

Shree Maruti Pole Industries Vs. ITO, Ward-3(2) At & Post : Masar Baroda. Tal: Padra Dist: Baroda

PAN : ABBFs 8324 D

अपीलाथ�/ (Appellant) �त् यथ�/ (Respondent)

Assessee by : Shri M.K. Patel, AR Revenue by : Ms.Sonia Kumar, Sr.DR

सुनवाई क� तार�ख/Date of Hearing : 11/10/2017 घोषणा क� तार�ख /Date of Pronouncement: 12/10/2017 आदेश/O R D E R

Assessee is in appeal before the Tribunal against order of the ld.CIT(A)-II, Baroda dated 6.2.2014 passed for the Asstt.Year 2006-07.

2.

Grievance of the assessee is that the ld.CIT(A) erred in confirming the penalty of Rs.5,84,100/- imposed by the AO under section 271(1)(c) of the Income Tax Act, 1961 on the following additions:

“a) Estimation of net profit - Rs.10,79,683/- b) Addition u/s.68 - Rs. 5,68,000/- c) Addition u/s.41(1) - Rs. 87,500/-

ITA No.1595/Ahd/2014

3.

Brief facts of the case are that assessee filed its return of income on 20.11.2006 declaring income at Rs.Nil. This return was selected for scrutiny assessment and notices under section 143(2) and 142(1) were issued on various dates. However, the assessee did not attend the hearing and accordingly, after making certain additions, AO passed assessment order under section 144 of the Act by revising its total income at Rs.47,81,620/- . This order of the AO was challenged before the ld.CIT(A) who gave part relief to the assessee. The AO also initiated penalty proceedings under section 271(1)(c) and imposed a penalty of Rs.5,84,100/- which was also confirmed by the ld.CIT(A). Not satisfied with the order of the ld.CIT(A), the assessee challenged quantum addition before the Tribunal. Assessee succeeded its case in ITA No.913/Ahd/2010 order dated 20.9.2016. Assessee is now before me challenging imposition of penalty under section 271(1)(c) of the Act.

4.

The ld.counsel for the assessee submits that since quantum additions have been deleted by the Tribunal vide its order dated 20.9.2016 (supra), penalty under section 271(1)(c) has no base to stand, and impugned penalty will get eliminated automatically. The ld.DR has not disputed this factual position on the issue.

5.

I have duly considered rival contentions and gone through the record carefully. We find that sub-clause (iii) of section 271(1)(c) provides mechanism for quantification of penalty. It contemplates that the assessee would be directed to pay a sum in addition to taxes, if any, payable him, which shall not be less than, but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of income and furnishing of inaccurate particulars of income. In other words, the quantification of the penalty is depended upon the addition made to the income of the assessee. Since basis for visiting the assessee with penalty has been extinguished by deleting

ITA No.1595/Ahd/2014

additions by the Tribunal in its order dated 20.9.2016 (supra) in the quantum appeal of the assessee the impugned penalty is non est, and accordingly penalty under section 271(1)(c) of the Act stands canceled. Appeal of the assessee is thus allowed.

6.

In the result, appeal of the assessee is allowed.

Order pronounced in the Court on 12th October, 2017.

Sd/- (RAJPAL YADAV) JUDICIAL MEMBER Ahmedabad; Dated 12/10/2017

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