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2016 (8) TMI 859 - AT - Income TaxPenalty u/s 271(1)(c) - Held that - In the case of K. C. Builders v. Asst. CIT 2004 (1) TMI 7 - SUPREME Court which has authoritatively laid down that where the additions made in the assessment order on the basis of which penalty for concealment was levied has been deleted, there remains no basis at all for levying the penalty for concealment and, therefore, in such a case no such penalty can survive. We find that no Departmental appeal has been filed assailing the relief granted by the Commissioner of Income-tax (Appeals) and in the face of the relief granted by the Income-tax Appellate Tribunal in the quantum proceedings the penalty order is dismissed as infructuous and the impugned order is set aside. - Decided in favour of assessee.
Issues:
Appeal against penalty imposed under section 271(1)(c) by Assessing Officer upheld by Commissioner of Income-tax (Appeals) - Assailed on the grounds of correctness of the order - Addition leading to penalty sustained by ITAT - Dispute over quantum order between Revenue and ITAT - Argument on the explanation offered by the assessee - Relevance of previous judicial decisions - Applicability of penalty in case of deleted additions - Interpretation of deferred revenue expenditure - Infructuous penalty order due to deletion of additions - Reference to K. C. Builders v. Asst. CIT [2004] 265 ITR 562 (SC) - Dismissal of penalty order by ITAT. Analysis: The judgment involves an appeal challenging the penalty imposed under section 271(1)(c) by the Assessing Officer, which was upheld by the Commissioner of Income-tax (Appeals). The appeal questions the correctness of the order dated December 24, 2010, pertaining to the 2000-01 assessment year. The authorized representative of the appellant argued that the addition on which the penalty was based had been deleted by the ITAT in previous proceedings. The Commissioner of Income-tax-Departmental representative contended that the Revenue had not accepted the quantum order passed by the ITAT, raising a dispute over the quantum order. The Departmental representative relied on the decision of the apex court in CIT v. Reliance Petroproducts P. Ltd. [2010] 322 ITR 158 (SC) to argue against the appellant's explanation, claiming it was neither bona fide nor true. In response, the authorized representative emphasized that the penalty arguments should be addressed separately, as the addition had been deleted, rendering the penalty baseless. The ITAT noted that the penalty order was based on specific additions/disallowances, some of which were deleted in the quantum proceedings. The ITAT referred to the decision in K. C. Builders v. Asst. CIT [2004] 265 ITR 562 (SC), stating that if the additions forming the basis of the penalty are deleted, the penalty becomes infructuous. The ITAT found no Departmental appeal against the relief granted by the Commissioner of Income-tax (Appeals) and dismissed the penalty order as infructuous, ultimately allowing the appeal of the assessee. The judgment delves into the interpretation of deferred revenue expenditure, citing precedents and legal provisions to support the decision to delete the addition on which the penalty was based. The ITAT emphasized that when additions forming the basis of a penalty are deleted, the penalty itself cannot stand. The ITAT's decision was guided by legal principles and previous judicial rulings, ultimately leading to the dismissal of the penalty order due to the deletion of the additions, in line with the decision in K. C. Builders v. Asst. CIT [2004] 265 ITR 562 (SC).
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