2019 (3) TMI 1161 - AT - Income Tax

Penalty u/s 271(1)(c) - quantification of the penalty - HELD THAT - The quantification of the penalty is depended upon the addition made to the income of the assessee. Since in the present case, basis for visiting the assessee with penalty has been extinguished by quashing the re-assessment order and thereby deleting addition by the Tribunal, the impugned penalty does not survive. There is no room for the Revenue to impose penalty under section 271(1)(c) in this case. Therefore, we cancel the impugned penalty and set aside both orders of the Revenue authorities passed under section 271(1)(c) of the Act. - Decided in favour of assessee.

Summary

Issues:
Appeal against penalty imposed under section 271(1)(c) of the Income Tax Act.

The appellant contested the penalty imposed by the ld.CIT(A), revolving around the issue of confirming a penalty of ?2,82,4323 under section 271(1)(c) of the Act. The appellant argued that the penalty was based on additions made by the AO, which were subsequently deleted due to the quashing of the assessment order by the Tribunal. The Tribunal held that the reopening of the assessment was unlawful, leading to the annulment of the re-assessment proceedings. The appellant contended that since the additions forming the basis of the penalty were nullified, the penalty itself was unsustainable. The Tribunal concurred, citing section 271(1)(c) which links the penalty amount to the tax sought to be evaded by the concealment of income. As the grounds for penalty imposition were extinguished by the Tribunal's decision, the penalty was deemed unwarranted. Consequently, the Tribunal canceled the penalty and overturned the orders of the Revenue authorities issued under section 271(1)(c) of the Act. The appeal of the assessee was allowed, with the pronouncement made on 22nd March 2019.

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