2016 (10) TMI 1324 - AT - Income Tax

Penalty u/s. 271(1)(c) - addition made in the quantum order framed by the AO - HELD THAT - We find that in assessee s own case the ITAT Delhi Bench in quantum proceedings has decided the issue in favour of the assessee and against the Revenue by quashing the assessment. Thus we find that in assessee s own case the ITAT Delhi Bench in quantum proceedings has decided the issue in favour of the assessee and against the Revenue by quashing the assessment. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of the order passed by the Ld. CIT(A).
2. Legitimacy of the penalty levied under Section 271(1)(c) of the Income Tax Act.
3. Validity of assessments under Section 153A of the Income Tax Act.

Detailed Analysis:

1. Validity of the order passed by Ld. CIT(A):

The assessee challenged the orders passed by the Ld. Commissioner of Income Tax (Appeals)-XII, New Delhi, dated 12.12.2013, for the assessment years 2003-04 and 2007-08, arguing that the orders were "bad in law and nature" and thus liable to be quashed. The Tribunal found that the issues raised in the appeals were common and identical and decided to address them together for convenience.

2. Legitimacy of the penalty levied under Section 271(1)(c) of the Income Tax Act:

The assessee contended that the Ld. CIT(A) erred in confirming the penalties of Rs. 951,245/- for AY 2003-04 and Rs. 3,17,45,629/- for AY 2007-08 under Section 271(1)(c) of the Act. The penalties were based on additions made in the quantum orders framed by the Assessing Officer (AO). The Tribunal noted that in the quantum proceedings, the ITAT had already decided in favor of the assessee by quashing the assessments. This decision was upheld by the Hon’ble High Court of Delhi, which dismissed the Revenue's appeals, thereby invalidating the penalties.

3. Validity of assessments under Section 153A of the Income Tax Act:

The Tribunal examined the validity of assessments made under Section 153A. It was found that no incriminating material was discovered during the search that could justify the additions made by the AO. The Tribunal cited its previous order dated 30.5.2014, which quashed the assessments on the grounds that no incriminating material was found, and the assessments were not valid under Section 153A. This view was supported by the Hon’ble High Court of Delhi in its judgment dated 30.11.2015, which upheld the Tribunal's decision and dismissed the Revenue's appeals. The High Court emphasized that assessments under Section 153A must be based on seized material and completed within the stipulated time frame.

Conclusion:

The Tribunal concluded that the penalties in dispute for both assessment years would not survive given that the assessments were quashed. Consequently, the orders of the authorities below were set aside, and the penalties were deleted. Both appeals filed by the assessee were allowed.

Order Pronouncement:

The order was pronounced in the Open Court on 07/10/2016, allowing both appeals filed by the assessee.