2018 (9) TMI 1397 - AT - Income Tax

Penalty u/s 271(1)(c) - enhancement made by the CIT(A) to the income of the assessee to the extent of ₹ 1 lac - Held that - We find that since the addition made on which penalty was levied by the CIT(Appeals) having been deleted by the I.T.A.T., no basis remains at all for levying penalty and the same is directed to be deleted - Decided in favour of assessee.

Summary

Issues:
Assessment of penalty under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2000-01.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) levying a penalty under section 271(1)(c) of the Income Tax Act, 1961. The penalty was imposed based on an enhancement made by the Commissioner to the income of the assessee. The enhancement was related to the disallowance of expenditure incurred concerning a penalty imposed by the Customs Authorities. The Commissioner of Income Tax (Appeals) recorded satisfaction for initiating penalty proceedings after issuing necessary notices to the assessee. The penalty proceedings before the Commissioner of Income Tax (Appeals) resulted in a penalty being levied at 100% of the tax sought to be evaded on the enhancement made by the Commissioner. However, the Income Tax Appellate Tribunal (ITAT) later deleted the addition made by the Commissioner, rendering the basis for levying the penalty invalid.

The Departmental Representative (DR) acknowledged that the addition made by the Commissioner had been deleted by the ITAT. Consequently, since the addition on which the penalty was based had been eliminated by the ITAT, there was no valid basis for levying the penalty. Therefore, the ITAT directed the deletion of the penalty imposed by the Commissioner.

In conclusion, the appeal of the assessee was allowed, and the penalty levied by the Commissioner of Income Tax (Appeals) was directed to be deleted. The decision was pronounced in the Open Court.