2016 (6) TMI 935 - AT - Income Tax

Penalty u/s. 271(1)(c) - unexplained creditors - Held that - As the addition on which the penalty in dispute was levied, which has been deleted by the ITAT 2013 (9) TMI 8 - ITAT DELHI , therefore, the penalty in dispute will not survive. Therefore, Ld. CIT(A) has rightly deleted the penalty in dispute. - Decided in favour of assessee

Summary

Issues Involved:
Appeal against deletion of penalty u/s. 271(1)(c) of the I.T. Act, 1961 on account of unexplained creditors.

Detailed Analysis:

1. Issue of Penalty Deletion:
The Revenue appealed against the deletion of penalty u/s. 271(1)(c) of the I.T. Act, 1961 concerning unexplained creditors for the assessment year 2009-10. The Ld. CIT(A) had deleted the penalty, prompting the Revenue to contest this decision.

2. Tribunal's Decision:
The ITAT carefully reviewed the facts and records of the case. The Tribunal noted that in a previous order dated 26.8.2013 in the assessee's own case for A.Y. 2009-10, the ITAT had already adjudicated and deleted the addition related to the unexplained creditors. The Tribunal highlighted that the amounts in question were outstanding as sundry creditors for several years, supported by ledger accounts. It was emphasized that no transactions occurred between the assessee and the creditors during the relevant year. Therefore, the provisions of Section 68 of the Act were deemed inapplicable. The Tribunal further elaborated on various legal precedents and judgments supporting the genuineness of the creditors and purchases made on credit, concluding that no addition was warranted.

3. CIT(A)'s Adjudication:
The Ld. CIT(A) also examined the issue and referred to the ITAT's order dated 26.8.2013, which favored the appellant. The CIT(A) acknowledged the genuineness of the sundry creditors as reflected in the appellant's books. Consequently, the penalty order passed by the ACIT was deemed unsustainable following the ITAT's decision, leading to the abatement of the penalty.

4. Final Decision:
Considering the findings of both the ITAT and the CIT(A), the Tribunal upheld the deletion of the penalty. Since the addition on which the penalty was based had been annulled by the ITAT's earlier order, the penalty in question was no longer valid. Consequently, the Tribunal confirmed the decision of the Ld. CIT(A) in deleting the penalty, leading to the dismissal of the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the deletion of the penalty u/s. 271(1)(c) based on the ITAT's previous decision regarding unexplained creditors for the assessment year 2009-10.