DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE -1(1), PANAJI vs. SMT VANDA AFONSO, CALANGUTE

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ITA 101/PAN/2019Status: DisposedITAT Panaji13 July 2023AY 2009-10Bench: HON’BLE SHRI S S GODARA (Judicial Member), SHRI G. D. PADMAHSHALI (Accountant Member)6 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the quantum addition itself was deleted by a separate order of the Tribunal, the penalty levied on that addition cannot survive. The penalty proceedings are unsustainable when the basis for the addition is removed.

What were the facts?

The Revenue filed appeals against the deletion of penalties levied under Section 271(1)(c) by the Assessing Officer. The penalties were consequential to additions made on account of deemed dividend under Section 2(22)(e).

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the underlying addition on which it was levied has been deleted.

Which sections of the Income-tax Act were involved?

Section 2(22)(e),Section 271(1)(c)

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Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, PANAJI BENCH, PANAJI

Before: HON’BLE SHRI S S GODARA & SHRI G. D. PADMAHSHALI

For Appellant: Shri Milind Kulkarni
For Respondent: Shri Prabhakar Anand DJ
Pronounced: 13/07/2023

ITA No’s.97, 98, 101,102, 107, 108, 111 & 112/PAN/2019 Edgar Braz Afonsi, Natalina Estela Vaz & Peter Soccoro Vaz आदेश / ORDER PER BENCH; The present bunch of eight appeals filed by the of the Revenue in case of different assessees are directed against separate orders of Commissioner of Income Tax (Appeals) Panaji-1, Panaji [‘CIT(A)’ hereinafter] passed u/s 250 of the Income-tax Act, 1961 [for short ‘the Act’], which ascended out of respective penalty orders of the Asstt. Commissioner of Income Tax, Circle-1(1), Panaji, Goa [‘AO’ hereinafter] for assessment year[‘AY’ hereinafter] 2009-10 & 2010-11.

2.

Since identical facts and similar issue is involved in this bunch of eight appeals, at the convenience and request of both the parties hereto, we have heard these matters together for a common and consolidated order taking as lead case. Resultantly our adjudication laid in succeeding paragraphs hereinafter shall mutatis-mutandis shall apply to the ITA No.98/PAN/2019, ITA No’s.101 & 102/PAN/2019, ITA No’s.107 & 108/PAN/2019 and ITA No’s.111 & 112/PAN/2019.

ITAT-Panaji Page 2 of 6

ITA No’s.97, 98, 101,102, 107, 108, 111 & 112/PAN/2019 Edgar Braz Afonsi, Natalina Estela Vaz & Peter Soccoro Vaz 3. The brief facts of are; 3.1 The assessee had filed his return of income u/s 139(1) of the Act declaring total income of ₹13,04,645/-. The Assessment Order u/s 153C r.w.s. 143(3) was framed on 31/03/2014 after making an addition of ₹2,34,81,018/- on account of Deemed Dividend u/s 2(22)(e) of the Act.

3.2 The consequent to aforestated addition, a penalty proceedings u/s 271(1)(c) were initiated on 31/03/2014 and after considering the submission of the assessee, a penalty @100% of tax sought to be evaded of ₹79,81,198/- was levied vide order dt. 28/06/2017.

3.3 Aggrieved by the levy, the assessee successfully challenged the order before the first appellate authority.

3.4 The Revenue aggrieved thereby brought up the present appeal before us on the following grounds ; “1. On facts and in circumstances of the case, the Ld.CIT(A) erred in deleting the penalty levied by the Assessing Officer u/s. 271(l)(c) of the I.T. Act, for furnishing inaccurate particulars of income.

2. On facts and in circumstances of the case, the Ld. CIT(A) erred in not considering the decision of the Hon'ble ITAT Mumbai in the case of SHANTIDEVI MAHAVIR PRASAD GUPTA VS INCOME TA OFFICER [ITAT-2014 (MUMBAI)- O], (2014) 151 ITD 445 (MUMBAI) where the Hon'ble ITAT ITAT-Panaji Page 3 of 6 ITA No’s.97, 98, 101,102, 107, 108, 111 & 112/PAN/2019 Edgar Braz Afonsi, Natalina Estela Vaz & Peter Soccoro Vaz has rejected the assessee's argument that deemed dividend being notional income, assessee cannot be said to have concealed income / furnished inaccurate particulars.

3.

On the facts and circumstances of the case, the Ld. CIT(A) ignored the fact that the Hon'ble ITAT Panaji Bench vide its order in to 27/PNJ/2015 & ITA No. 413 dated 02.12.2016 upheld the addition made by the Assessing Officer on deemed dividend.

4. On facts and in circumstances of the case, the Ld. CIT(A) erred in not appreciating the fact that the was proper recording of reasons for initiation of penalty u/ s. 271 (1)(C) in the body of the assessment order.

5. For the above grounds and any additional grounds that may be agitated during the course of t hearing it is prayed that the order of the Ld. CIT(A)-1, Panaji may be quashed and that of the / restored.”

4.

The controversy under the present appeal lies in a narrow compass as to survival of penalty levied consequent to addition made u/s 2(22)(e) of the Act.

5.

We have heard the rival submissions and gone through the relevant material on record and observed that, the only basis for the instant imposition of penalty is the addition on account of Deemed Dividend u/s 2(22)e of the Act. We note that, the Ld. CIT(A) after elaborated discussion vide para 10-17 had deleted the penalty in the light of judicial precedents laid by the Hon’ble Bombay ITAT-Panaji Page 4 of 6

ITA No’s.97, 98, 101,102, 107, 108, 111 & 112/PAN/2019 Edgar Braz Afonsi, Natalina Estela Vaz & Peter Soccoro Vaz High Court in ‘CIT Vs Samson Perinchery’ reported in 392 ITR 4 (Bom) and ‘CIT Vs Dhariwal Industries Ltd.’ (Bom)

6.

We further note that, the quantum addition in this case of the respondents were challenged in IT(SS)A Nos. 23 to 27/PAN/2015 and the Tribunal vide its order dt 07/10/2021 in has deleted the addition. A copy of such order is placed on record.

7.

The fact that the very basis for imposition of penalty, does not survive, there can be no question of any imposition of penalty thereon. When the quantum addition does not survive, the penalty levied u/s 271(1)(c) of the Act on the corresponding quantum addition also cannot survive. We take support from judicial precedent in the case of ‘K.C. Builders vs. ACIT 135 Taxman 461 (SC)’, in which the Hon’ble Apex Court held that where the additions made in the Assessment Order, on the basis of which penalty for concealment was levied, are deleted, there remains no basis at all for levying the penalty for concealment, and therefore, in such a case, no such penalty can survive and the same is liable to be cancelled.

ITAT-Panaji Page 5 of 6

ITA No’s.97, 98, 101,102, 107, 108, 111 & 112/PAN/2019 Edgar Braz Afonsi, Natalina Estela Vaz & Peter Soccoro Vaz 8. In view of the foregoing settled position of law, the extant appeal filed by Revenue against the impugned order whereby the penalty is deleted on merits, do not stand any more. For the reasons, we uphold the impugned order and quash the order of penalty, thus all grounds of appeal raised by the Revenue in are dismissed.

Resultantly ITA No’s.101 & 102/PAN/2019, ITA No’s.107 & 108/PAN/2019 and ITA No’s.111 & 112/PAN/2019 also dismissed.

9.

In result, all eight appeals of the Revenue are DISMISSED. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Thursday 13th day of July, 2023.

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