2019 (1) TMI 1529 - AT - Income Tax

Penalty u/s 271(1)(c) - Held that - In view of the fact that the quantum additions/disallowances itself has been set aside having regard to the appellate order of the ITAT in quantum proceedings, the very basis for imposition of penalty under s. 271(1)(c) does not survive at present. Therefore, the action of the CIT(A) towards sustaining penalty is set aside and restored back to the file of CIT(A) for fresh adjudication in the light of quantum appeal. - Appeal of the Assessee is allowed for statistical purposes.

Summary

Issues:
- Appeal against penalty order under Section 271(1)(c) of the Income Tax Act, 1961 for AY 2009-10.

Analysis:
1. The appeal was filed by the Assessee against the order of the CIT(A) confirming the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961. The grounds of appeal raised various issues, including the lack of initiation of penalty proceedings in the assessment order, incorrect issuance of notices under Section 271(1)(c) r.w.s. 274, and the imposition of penalty on disallowance of interest for furnishing inaccurate particulars of income and concealment of income.

2. During the hearing, the Assessee's representative highlighted that the quantum additions/disallowances leading to the penalty imposition had been set aside by the Tribunal in a previous order. The Tribunal had directed the matter back to the CIT(A) for fresh adjudication in the light of the quantum appeal. As a result, the basis for imposing the penalty under Section 271(1)(c) was no longer valid due to the quantum proceedings outcome.

3. Considering the Tribunal's decision on the quantum aspects and the lack of a valid basis for the penalty, the Appellate Tribunal set aside the CIT(A)'s action in sustaining the penalty and remanded the case back to the CIT(A) for fresh consideration in alignment with the quantum appeal decision. Consequently, the Assessee's appeal was allowed for statistical purposes.

4. The judgment, delivered by the Appellate Tribunal ITAT Ahmedabad, emphasized the interplay between quantum proceedings and penalty imposition under Section 271(1)(c) of the Income Tax Act, 1961. The importance of a valid basis for levying penalties, as well as the need for consistency with quantum appeal outcomes, was underscored in this case. The decision provided clarity on the procedural requirements and the necessity for a proper foundation for penalty imposition in income tax matters.