2019 (5) TMI 1639 - AT - Income Tax

Penalty u/s 271(1)(c) - addition deleted in quantum appeal of the assessee - HELD THAT - On a perusal of the impugned order of the learned Commissioner (Appeals), we find that in course of hearing of appeal, the decision of the Tribunal in quantum appeal was filed. On going through the order of the Tribunal, Commissioner (Appeals) having found that the additions on the basis of which penalty u/s 271(1)(c) was imposed have been deleted by the Tribunal, held that the penalty order passed under section 271(1)(c) of the Act would not survive. The aforesaid factual position remains uncontroverted. In fact, in ground no.1 of the present appeal, the Revenue has accepted the fact that the additions on the basis of which penalty under section 271(1)(c) of the Act was imposed have been deleted by the Tribunal. No infirmity in the order of the learned Commissioner (Appeals) in deleting the penalty imposed.

Summary

Issues Involved:
Challenge to deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2005-06.

Analysis:
The appeal was filed by the assessee challenging the order deleting the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. During the hearing, no one appeared on behalf of the assessee, leading to an ex-parte disposal. The Departmental Representative informed that the additions on which the penalty was based had been deleted by the Tribunal in the quantum appeal, rendering the penalty irrelevant. The Commissioner (Appeals) found that the additions leading to the penalty had indeed been deleted by the Tribunal, which was accepted by the Revenue. Consequently, the order deleting the penalty was upheld by the Tribunal, as there was no basis for the penalty to survive post the deletion of the additions. The grounds of the appeal were dismissed, and the appeal itself was consequently dismissed. The order was pronounced in open court on 17.05.2019.

This judgment primarily dealt with the issue of the deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2005-06. The Tribunal upheld the decision of the Commissioner (Appeals) to delete the penalty as the additions on which the penalty was based had been deleted by the Tribunal in the quantum appeal. The Tribunal found no infirmity in the decision of the Commissioner (Appeals) and dismissed the appeal accordingly. The judgment highlights the importance of the factual position in determining the validity of penalties imposed under the Income Tax Act, emphasizing that penalties cannot survive if the underlying additions have been deleted.