2019 (7) TMI 599 - AT - Income Tax

Penalty u/s 271(1)(c) - addition has been deleted by the Tribunal in quantum appeal - HELD THAT - Sub-clause (iii) of section 271(1)(c) provides mechanism for quantification of penalty. It contemplates that the assessee would be directed to pay a sum in addition to taxes, if any, payable by him, which shall not be less than , but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of income or furnishing of inaccurate particulars of income. In other words, the quantification of the penalty is depended upon the addition made to the income of the assessee. In the present case, the addition has been deleted by the Tribunal vide order dated 12.5.2016 cited supra, and therefore penalty under section 271(1)(c) of the Act has not limb to stand. CIT(A) has rightly cancelled the penalty, which we confirm and the ground of the Revenue challenging impugned penalty is rejected. This observation and findings of our are also equally applicable to the cases of other three assessees. Therefore, appeals of the Revenue in all the cases are dismissed.

Summary

Issues:
Appeals by Revenue against deletion of penalty under section 271(1)(c) of the Income Tax Act by CIT(A).

Analysis:
The judgment involves four appeals by the Revenue against separate orders of the ld.CIT(A)-4, Ahmedabad, all disposed of by a single order due to a common issue. The Revenue's grievance was the deletion of penalties imposed by the AO under section 271(1)(c) of the Income Tax Act. The facts and orders in all cases were identical, with variations in penalty amounts. The Tribunal considered the case of one assessee for convenience. The penalty was deleted by the CIT(A) based on the deletion of additions made by the AO, a fact uncontested by the Revenue.

The Tribunal noted that an addition to the total income of the assessee was made by the AO, which was later deleted by the Tribunal. The ld.CIT(A) reproduced the Tribunal's finding, emphasizing the lack of evidence to support the addition. The Tribunal highlighted that penalty under section 271(1)(c) is dependent on the additions made to the income of the assessee. Since the additions were deleted, the penalty had no basis. The Tribunal upheld the CIT(A)'s decision to cancel the penalty, applying the same reasoning to all four cases. The appeals by the Revenue were dismissed.

Regarding the Cross objections filed by the assessees, the Tribunal found no merit as the grievances were not against any part of the CIT(A)'s order. The Tribunal clarified that for a CO to be maintainable, the cross-objector must demonstrate grievances against a specific part of the impugned order. Since the COs did not meet this requirement, they were deemed not maintainable. Consequently, all appeals by the Revenue and COs by the assessees were dismissed.

In conclusion, the Tribunal upheld the CIT(A)'s decision to delete the penalties imposed by the AO under section 271(1)(c) for all four assessees. The judgment emphasized the importance of evidence and the basis for quantifying penalties under the Income Tax Act. The dismissal of both the Revenue's appeals and the assessees' COs concluded the matter.