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2021 (7) TMI 1082 - AT - Income TaxPenalty u/s 271(1)(c) - additions on account of notional interest earned from the Foreign Bank Account i.e., HSBC, Geneva - HELD THAT -CIT(A) deleted the penalty levied by the A.O. u/s 271(1)(c) of the I.T. Act on the ground that the addition with regard to notional interest has been deleted and, therefore, the penalty does not survive. We do not find any infirmity in the Order of the Ld. CIT(A) in deleting the penalty levied by the A.O. on account of notional interest earned from HSBC, Geneva for all these years under consideration. Admittedly, in the quantum proceedings, the Tribunal has already decided the issue in favour of the assessee and the appeal filed by the Revenue has been dismissed 2019 (7) TMI 596 - ITAT DELHI Since the Tribunal has already upheld the Order of the Ld. CIT(A) in deleting the quantum addition and the Hon ble Delhi High Court 2021 (2) TMI 1182 - DELHI HIGH COURT has already dismissed the appeal filed by the Revenue, therefore, the very basis on which the penalty was levied by the A.O. does not survive. Accordingly, the order of the Ld. CIT(A) for all the five assessment years under appeal deleting the penalty on account of addition of notional interest is upheld. Accordingly, the grounds raised by the Revenue in all the five assessment years under appeal are dismissed.
Issues:
- Appeal against deletion of penalty on concealed income imposed by AO - Validity of CIT(A) order in deleting penalty - Tribunal's decision on notional interest earned from Foreign Bank Account - High Court's dismissal of Revenue's appeal - Upholding CIT(A) order in deleting penalty Analysis: 1. The Revenue filed five appeals challenging the CIT(A)'s deletion of penalties imposed by the Assessing Officer (AO) on concealed income related to undisclosed interest income in HSBC Geneva for the assessment years 2008-2009 to 2012-2013. 2. The grounds raised by the Revenue in all appeals focused on the alleged errors by the CIT(A) in deleting the penalties despite the assessee's deliberate concealment of income in HSBC Geneva. The Revenue sought to add, amend, or alter grounds of appeal. 3. The Assessee's Counsel highlighted that the Tribunal had already deleted the additions forming the basis for the penalties in a consolidated order for the assessment years 2007-2008 to 2012-2013. This deletion was based on notional interest in the Foreign Bank Account at Geneva. The Tribunal's decision was subsequently upheld by the Delhi High Court, leading to the dismissal of Revenue's appeals. 4. The Departmental Representative (D.R) acknowledged that the issue had been decided in favor of the assessee by the Tribunal and that the appeals by the Revenue had been dismissed by the Delhi High Court. 5. After considering arguments from both sides, the ITAT Delhi found that the AO had levied penalties under section 271(1)(c) of the Income Tax Act based on notional interest earned from the Foreign Bank Account in HSBC Geneva. The CIT(A) had deleted these penalties, citing the deletion of the notional interest additions. The ITAT upheld the CIT(A)'s decision, emphasizing that the penalties did not survive due to the deletion of the underlying additions. 6. The ITAT referenced the High Court's dismissal of Revenue's appeal, which concurred with the Tribunal's decision on the quantum additions and interest. Consequently, the ITAT upheld the CIT(A)'s order in deleting the penalties for all the assessment years under appeal, as the basis for the penalties no longer existed. 7. Ultimately, the ITAT dismissed all five appeals by the Revenue, affirming the CIT(A)'s orders to delete the penalties on account of notional interest additions. The decision was pronounced in open court on 20.07.2021.
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