2018 (2) TMI 301 - AT - Income Tax

Penalty u/s 271(1)(c) - additions in the income of the assessee, one is made by the AO which was deleted by the Tribunal and another is made which was surrendered and offered to tax by the assessee - Held that - CIT(A) deleted the penalty levied by the AO in respect of the additions made by the AO while passing the assessment u/s 153A and 153B r.w.s. 143(3). Revenue has not disputed the fact that the Tribunal has deleted the additions made by the AO and consequently the penalty levied by the Assessing to the extent of addition deleted by the Tribunal is not sustainable. Hence, we do not find any error or illegality in the impugned order of the ld. CIT(A) when the Tribunal while passing the order dated 20.03.2017 in quantum appeals deleted the addition made by the AO. Therefore, the penalty levied u/s 271(1)(c) would not survive and accordingly has been rightly deleted by the ld. CIT(A). Merely filing of the appeal before the Hon ble High Court will not help the case of the Revenue when neither the said order is stayed nor reversed by the Hon ble High Court. Accordingly, in the facts and circumstances of the case when the addition made by the AO itself has been deleted by the Tribunal in the quantum appeals then the levy of penalty has no legs to stand. - Decided against revenue.

Summary

Issues involved:
- Deletion of penalty u/s 271(1)(c) by CIT(A) for assessment years 2005-06 to 2007-08 & 2009-10 to 2011-12.
- Challenge of penalty levy by Revenue.
- Connection between quantum appeals and penalty levied.

Analysis:

1. The appeals by the Revenue were against the composite order of CIT(A) for penalty under section 271(1)(c) of the IT Act for various assessment years. The Revenue raised common grounds in these appeals, except for the quantum of penalty deleted by the CIT(A) for the assessment year 2005-06. The Revenue challenged the deletion of penalty by CIT(A) based on the additions made by the Assessing Officer (AO) which were later deleted by the Tribunal in quantum appeals.

2. The search and seizure action under section 132 of the Act led to the disclosure and surrender of income by the assessee. The AO made additions to the return income of the assessee for the assessment years under consideration, which were later deleted by the Tribunal. The AO also levied penalties under sections 271(1)(c) and 271AAA of the Act, which the CIT(A) deleted citing the Tribunal's deletion of additions. The Revenue filed appeals against the deletion of penalties, while the assessee challenged penalties for different reasons.

3. The Revenue's appeals questioned the deletion of penalties by CIT(A) based on the Tribunal's deletion of additions. The issue revolved around whether the penalties were sustainable after the Tribunal's decision on the additions made by the AO. The Revenue's penalties were against amounts related to additions made by the AO, which were subsequently deleted by the Tribunal.

4. The Tribunal found that since the additions made by the AO were deleted by the Tribunal in quantum appeals, the penalties levied by the AO were not sustainable. The Tribunal noted that the Revenue did not dispute the deletion of additions by the Tribunal, and therefore, the penalties could not stand. Merely filing an appeal before the High Court without a stay or reversal of the Tribunal's decision did not support the Revenue's case. Consequently, the Tribunal upheld the CIT(A)'s decision to delete the penalties levied under section 271(1)(c).

5. In conclusion, the Tribunal dismissed the Revenue's appeals, emphasizing that the penalties were rightly deleted by the CIT(A) as the additions made by the AO were overturned by the Tribunal in quantum appeals. The Tribunal's decision was based on the principle that penalties cannot be sustained when the underlying additions have been deleted. The Tribunal pronounced the order on 31/01/2018.

This detailed analysis covers the issues involved in the judgment, the arguments presented by both parties, and the Tribunal's reasoning leading to the decision to dismiss the Revenue's appeals.