2019 (7) TMI 1488 - AT - Income Tax

Penalty u/s 271(1)(c) - quantum addition deleted - disallowance of speculation loss and disallowance u/s 14A - HELD THAT - As in the assessee s own case has deleted the quantum, therefore, the CIT(A) has deleted the penalty. The contention of the Ld. Representative of the Department is that the Department has not accepted the decision of the Hon ble ITAT on the quantum deletion but it is a matter on record that at this stage, the quantum nowhere exists. Since the quantum has been deleted by Hon ble ITAT in the assessee s own case, therefore, we are of the view that the CIT(A) has rightly deleted the penalty. Accordingly, we uphold the decision of the CIT(A) in question and dismissed the appeal of the revenue

Summary

Issues Involved:
Appeal against deletion of penalty u/s 271(1)(c) by CIT(A) - Quantum addition - Application of section 73 - Interpretation of the explanation to section 73 - Disallowance of speculation loss - Gross total income computation - Deletion of penalty based on ITAT's quantum deletion decision.

Analysis:
The appeal before the ITAT Mumbai was regarding the deletion of a penalty u/s 271(1)(c) by the CIT(A) concerning the assessment year 2009-10. The assessment determined the total income of the assessee, with discrepancies related to disallowance of speculation loss and disallowance u/s 14A of the Act. The penalty was initiated, and after the assessee's reply, a penalty of ?29,95,000 was levied. The CIT(A) deleted the penalty, leading to the revenue's appeal before the ITAT.

The main contention in the appeal was the disallowance of speculation loss by the Assessing Officer (AO) and its treatment under section 73 of the Income Tax Act. The CIT(A) considered the ITAT's decision in the assessee's own case for the same assessment year, where the ITAT had allowed the appeal based on the decision of the Bombay High Court. The Bombay High Court had held that section 73 would not apply in certain cases, as explained in detail regarding the interpretation of the provision and the computation of gross total income.

The ITAT upheld the CIT(A)'s decision to delete the penalty, citing that since the quantum addition had been deleted by the ITAT in the assessee's case, the penalty deletion was justified. The ITAT noted that the revenue's contention about not accepting the ITAT's decision on quantum deletion was irrelevant as the quantum issue had been resolved. Therefore, the ITAT dismissed the revenue's appeal and upheld the CIT(A)'s decision to delete the penalty.

In conclusion, the ITAT Mumbai dismissed the revenue's appeal and upheld the deletion of the penalty u/s 271(1)(c) by the CIT(A) based on the ITAT's quantum deletion decision in the assessee's case. The judgment emphasized the importance of considering the quantum issues resolved by the ITAT in determining the validity of the penalty deletion.