THE ORIENTAL INSURANCE CO. LTD.,NEW DELHI vs. DCIT, CIRCLE- 1, LTU, NEW DELHI

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ITA 1411/DEL/2018Status: DisposedITAT Delhi16 August 2023AY 2011-123 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that since all the quantum additions, except for depreciation, were deleted by the Tribunal, the penalty levied on those additions had no basis. Regarding depreciation, the issue was set aside to the AO for fresh adjudication.

What were the facts?

The assessee company faced penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961, following additions made to its income during assessment. These additions included profit on sale of investment, interest income, depreciation, and other disallowances.

What were the issues?

The primary issue was whether penalty under Section 271(1)(c) could be sustained when the underlying additions forming the basis of the penalty were deleted by the appellate tribunal. A secondary issue pertained to the penalty on depreciation which was set aside for fresh assessment.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 32,Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI

Before: SH. N. K. BILLAIYA & SH. YOGESH KUMAR US

Hearing: 10/08/2023Pronounced: 16/08/2023

order of the CIT(A)-22, New Delhi dated 29.12.2017 pertaining to A.Y.2011-12.

2.

Both these appeals were heard together and are disposed of by this common order for the sake of convenience and brevity. The common grievance in both these appeals relates to the levy of penalty u/s.271 (1)(c) of the Act.

3.

The roots for the levy of penalty lie in the assessment order dated 13.01.2014 framed u/s.143(3) of the Act wherein the following additions were made :-

S.No. Particulars Amount (in Rs.) 1 Profit on sale of investment 10,27,94,88,259/- 2 Interest income not provided as 80,52,21,000/- income 3 Disallowance of depreciation 1,04,90,324/- u/s. 32 4 Disallowance u/s. 14A 49,84,91,810/- 5. Disallowance of guest house 47,43,236/- expenses 6 Provision for standard assets 2,94,82,474/-

4.

Penalty proceedings were separately initiated and penalty were levied accordingly on the additions sustained.

5.

Before us the Counsel for the assessee stated that all the quantum additions have been deleted by this Tribunal, therefore, the penalty does not have any legs to stand. The DR fairly conceded to this.

6.

We have carefully perused the orders of the authorities below. We find force in the contention of the Counsel. This Tribunal in order dated 22.11.2022 had the occasion to consider the quarrel relating to the quantum additions. A careful perusal of the order of the Tribunal shows that the quantum additions have been deleted. However, we find that the issue relating to the disallowance of depreciation has been set aside to the files of the AO, therefore, to this extent the AO is directed to decide the issue of levy of penalty after deciding the quantum.

7.

Since all other additions have been deleted we do not find any merit in the levy of penalty u/s. 271 (1) (c) of the Act.

8.

In the result, the appeal of the revenue is dismissed and that of the assessee is allowed. Order pronounced in the open court on 16.08.2023.

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