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Issues involved: Appeal against penalty imposed u/s 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2003-04.
Summary: 1. Background and Appeal: The taxpayer filed an appeal against the penalty of Rs. 1,51,28,982 imposed u/s 271(1)(c) for the assessment year 2003-04, which was upheld by the Commissioner (Appeals). 2. Tribunal's Decision: The Tribunal noted that related quantum additions had been restored to the Assessing Officer for fresh consideration by a coordinate bench. The taxpayer argued that since the Tribunal did not approve the quantum additions, the basis for the penalty ceased to exist. The Tribunal agreed, stating that the foundation of the penalty ceases to exist when additions are disapproved and remitted for reconsideration. 3. Authority to Initiate Penalty Proceedings: The Tribunal clarified that the Assessing Officer or the CIT(A) could initiate penalty proceedings again if they deemed it appropriate after confirming the quantum additions wholly or partly. The decision to initiate penalty proceedings must be based on a separate assessment of whether it is a fit case for penalty, even if the quantum additions are reiterated. 4. Conclusion: Considering the legal position and factual matrix, the Tribunal held that the penalty should be deleted as the basis for the penalty no longer existed. The Tribunal allowed the appeal and deleted the penalty of Rs. 1,51,28,982 imposed on the taxpayer. Judges: - Shri Pramod Kumar, Accountant Member - Shri R.S. Padvekar, Judicial Member Legal Representatives: - For the Petitioner: Shri A.V. Sonde and Shri Ketan Ved - For the Respondent: Shri Ajit Srivastava and Shri M.B. Reddy Date of Judgment: 6th January 2010 Citation: 2010 (1) TMI 1172 - ITAT MUMBAI
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