2021 (6) TMI 307 - AT - Income Tax

Penalty u/s 271(1)(c) - Advance received from Nopany Sons Pvt l td. u/s 68, Addition on account of cessation of liability Addition on account of debit balances written off amounting - HELD THAT - We find that Ld.CIT(A) has relied on the findings and observations of the Hon ble Tribunal and deleted the penalty. Considering the facts, circumstances and decisions, we do not find any infirmity in the order of the CIT(A) and uphold the same and dismiss the grounds of appeal of the revenue.

Summary

Issues:
1. Whether the Commissioner of Income Tax (Appeals) erred in deleting the penalty levied on various additions made by the Assessing Officer under sections 68, cessation of liability, and debit balances written off?

Analysis:
1. The appeal was filed by the revenue against the order of the Commissioner of Income Tax (Appeals) concerning penalties imposed under sections 271(1)(c) and 250 of the Income Tax Act, 1961. The revenue challenged the deletion of penalties totaling ?57,30,000 on additions made, including advances received, cessation of liability, and debit balances written off. The Assessing Officer (AO) had added these amounts to the total income of the assessee, leading to penalty proceedings under section 271(1)(c) of the Act.

2. The assessee, engaged in film direction and production, initially disclosed a total income of ?11,71,20,662 for the relevant assessment year. During scrutiny, the AO made additions related to income from house property, cessation of liability, and advances received. The AO initiated penalty proceedings due to unsatisfactory explanations provided by the assessee, leading to the imposition of penalties. The CIT(A) later deleted these penalties based on the Hon'ble Tribunal's decision to grant relief to the assessee on the disputed issues.

3. The Hon'ble Tribunal, during the appeal, noted that the additions on which penalties were imposed had been deleted in the quantum appeal. Specifically, the Tribunal examined the details related to advances received and explained the commercial transactions between the parties, leading to the deletion of the addition. Additionally, the Tribunal considered the liabilities outstanding in the assessee's books and the write-off of balances, concluding that the AO's actions were unjustified and deserved to be deleted.

4. The CIT(A) relied on the Tribunal's findings and observations to delete the penalties imposed by the AO. The Tribunal, after considering the facts, circumstances, and decisions, upheld the CIT(A)'s order and dismissed the revenue's appeal. Consequently, the appeal filed by the revenue against the deletion of penalties was dismissed, affirming the decision in favor of the assessee.

In conclusion, the Tribunal upheld the CIT(A)'s decision to delete the penalties imposed by the AO, emphasizing that the additions leading to penalties had been deleted by the Hon'ble Tribunal. The detailed analysis of each issue, including advances received, cessation of liability, and debit balances written off, supported the dismissal of the revenue's appeal and the allowance of the assessee's appeal.