2012 (8) TMI 391 - AT - Income Tax

Penalty u/s 271(1)(c) - dis-allowance during reassessment of the claim already allowed u/s 80-IB on ground that project in question was residential cum commercial which did not qualify for deduction u/s 80-IB(10) - dis-allowance in question was however deleted by Coordinate Bench of Mumbai ITAT, upheld by jurisdictional High Court - Held that - Since dis-allowance has already been deleted by Tribunal and upheld by jurisdictional High Court, hence there exists no basis to levy penalty u/s 271(1)(c). We, therefore, do not find any infirmity in CIT(A) s order deleting penalty - Decided in favor of assessee.

Summary

Issues:
Appeal against deletion of penalty u/s 271(1)(c) for AY 2004-05 and 2005-06.

Analysis:
1. Assessment Proceedings and Reopening Notice:
- AO allowed deduction u/s 80-IB but later withdrew it due to the project being residential cum commercial.
- Reassessment order confirmed by Ld. CIT (A).

2. Penalty Proceedings:
- AO imposed penalty for furnishing inaccurate particulars of income.
- Relied on Supreme Court judgment in CIT vs. Dharmendra Processors.
- Assessee appealed against penalty order.

3. Appellant's Arguments:
- Assessee's conduct covered by penalty provisions.
- Relied on penalty order findings.

4. Respondent's Arguments:
- Disallowance deleted in quantum proceedings by Mumbai ITAT and High Court.
- Penalty lacks basis due to quantum proceedings' outcome.

5. Judgment and Findings:
- Coordinate Bench accepted assessee's appeal against disallowance.
- High Court upheld Coordinate Bench order.
- No basis for penalty under section 271(1)(c) due to quantum proceedings' outcome.
- CIT (A) justified in deleting penalty.
- Appeals rejected, penalty order deletion upheld.

This detailed analysis of the judgment highlights the sequence of events, arguments presented by both parties, findings of the courts, and the ultimate decision to reject the appeals and uphold the deletion of the penalty under section 271(1)(c) for the assessment years in question.