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2018 (1) TMI 982 - AT - Income TaxPenalty u/s 271(1)(c) - disallowance u/s 80IA in respect of power plant and disallowance of interest in relation to investment made with the subsidiary companies - Held that - Coordinate Bench in the quantum proceedings 2016 (10) TMI 1115 - ITAT JAIPUR for the matter in relation to both the additions namely claim u/s 80IA in respect of power plant and disallowance of interest in relation to investment made with the subsidiary companies which is the subject matter of penalty order and form the basis for levy of penalty u/s 271(1)(c) by the AO has been set aside to the file of the Assessing Officer to examine the matter of afresh. Where the very basis for levy of penalty has been set-aside to the file of the AO, it is not necessary for us to go into the merits of the case and the penalty order passed u/s 271(1)(c) deserves to be set-aside. In the result, the ground taken by the Revenue is dismissed.
Issues:
Challenge of deletion of penalty under section 271(1)(c) of the Income Tax Act by the Revenue for Assessment Year 2008-09. Analysis: 1. Background: The Revenue challenged the deletion of penalty of ?1,23,23,258/- imposed under section 271(1)(c) by the Ld. CIT(A) for Assessment Year 2008-09. 2. Assessment Proceedings: An addition of ?61,06,26,670/- was made by the Assessing Officer in the assessment proceedings under section 143(3). Penalty proceedings were separately initiated under section 271(1)(c). 3. Deletion of Addition: The Ld. CIT(A) deleted the addition to the extent of ?57,15,59,130/-, which related to a claim under section 80IA for a power plant and disallowance of interest in relation to investments with subsidiary companies. 4. Levy of Penalty: After a fresh show cause notice and considering the submissions, the AO levied a penalty of ?1,23,23,258/-, holding that inaccurate particulars of income were furnished by the assessee. 5. Appellate Proceedings: The assessee appealed to the Ld. CIT(A), referencing a Co-ordinate Bench order in quantum proceedings. The matter was set aside for fresh examination by the Assessing Officer. 6. Legal Precedents: The Ld. CIT(A) referred to legal authorities, including a Supreme Court judgment and a Rajasthan High Court decision, emphasizing that if the basis for penalty levy is set aside by a higher judicial authority, the penalty cannot stand. 7. Decision: Considering the legal precedents, the Ld. CIT(A) held that if the basis for penalty levy is set aside, the penalty cannot survive. Thus, the penalty of ?1,23,23,258/- was directed to be deleted. 8. Appeal: The Revenue appealed before the ITAT, with the Ld. DR supporting the AO's order. 9. ITAT's Finding: The ITAT reviewed the findings of the Coordinate Bench in the quantum proceedings, which set aside the matters for fresh examination by the AO. As the basis for penalty levy was set aside, the ITAT dismissed the Revenue's appeal. 10. Conclusion: The ITAT upheld the Ld. CIT(A)'s decision to delete the penalty, as the basis for the penalty levy was set aside for fresh examination. The appeal of the Revenue was dismissed, affirming the deletion of the penalty. This detailed analysis provides a comprehensive overview of the legal judgment involving the challenge of deletion of penalty under section 271(1)(c) of the Income Tax Act for Assessment Year 2008-09.
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