2016 (7) TMI 405 - HC - Income Tax

Penalty levied u/s. 271 (1)(c) - Held that - No penalty is imposable as in quantum appeal, the Respondent-Assessee had succeeded. - Decided in favour of assessee

Summary

Issues:
1. Challenge to the order of the Income Tax Appellate Tribunal regarding penalty levied under section 271(1)(c) of the Income Tax Act for Assessment Year 2004-05.
2. Deletion of penalty by the Tribunal based on the success of the Respondent-Assessee in the quantum appeal.
3. Imposition of penalty under normal provisions of the Income Tax Act rather than under section 115JB.

Analysis:
1. The first issue raised in the appeal challenges the Tribunal's decision to delete the penalty levied under section 271(1)(c) of the Income Tax Act. The Revenue contended that the Tribunal erred in deleting the penalty as the quantum addition had been deleted by the ITAT, despite the Revenue's pending appeal to the High Court. However, the Revenue's appeal was subsequently dismissed by the High Court, rendering the issue moot. The Court held that no substantial question of law arose from this issue, leading to the dismissal of the appeal.

2. Moving on to the second issue, the Tribunal's deletion of the penalty was based on the success of the Respondent-Assessee in the quantum appeal. The Counsel for the Revenue acknowledged that the Revenue's appeal in the quantum proceedings had been dismissed by the High Court. Consequently, the Tribunal's decision to delete the penalty was justified, and the Court found no substantial question of law to entertain on this matter, leading to the dismissal of the appeal.

3. Lastly, the issue of penalty imposition under the normal provisions of the Income Tax Act rather than under section 115JB was addressed. The Assessment Order and the Assessing Officer's penalty imposition both confirmed that the Respondent-Assessee was assessed under the normal provisions and not under section 115JB. Since the quantum proceedings favorably resolved the issues forming the basis of the penalty proceedings, the question of penalty imposition under section 115JB became academic. Consequently, the Court found no substantial question of law arising from this issue and dismissed the appeal accordingly.

In conclusion, the High Court dismissed the appeal challenging the Tribunal's order regarding penalty imposition under section 271(1)(c) of the Income Tax Act for the Assessment Year 2004-05. The Court found no merit in the Revenue's contentions, as subsequent developments had rendered the issues raised moot or academic, leading to the dismissal of the appeal without costs.