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2022 (6) TMI 120 - AT - Income TaxPenalty u/s 271(1)(c) - disallowance of deduction u/s 10AA and disallowance on allocation of loss premium - HELD THAT - The first addition is with respect to the disallowance of deduction under Section 10AA of the Act. The co-ordinate Bench 2019 (6) TMI 858 - ITAT MUMBAI has deleted the above disallowance. Merely, because the same has been agitated before the Hon'ble High Court, the penalty cannot be levied. As on this date the above addition does not stand and it is decided in favour of the assessee, the penalty to that extent has been correctly deleted by the learned Commissioner of Income-tax (Appeals). Addition/disallowance of loss on option premium allocated to the SEZ unit the co-ordinate Bench has remanded the matter back to the file of the learned Assessing Officer. Therefore, when the particular addition has been restored back to the file of the learned Assessing Officer, the power of the learned Assessing Officer for initiation of penalty proceedings, if in set aside proceedings, the learned Assessing Officer is satisfied that there is concealment of income or furnishing of inaccurate particulars of income to initiate the penalty. However, at the present stage there is no infirmity in the order of the learned CIT(A). Hence, we uphold the order of the learned CIT(A) deleting the penalty under Section 271(1)(c) of the Act. Accordingly, the order of the learned Assessing Officer is dismissed.
Issues:
1. Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961. 2. Disallowance under Section 10A of the Act. 3. Addition on account of loss on option premium allocated to SEZ unit. Analysis: Issue 1: Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961 The appeal was filed by the Deputy Commissioner of Income-tax against the order passed by the National Faceless Appeal Center for the Assessment Year 2011-12. The penalty of Rs. 2,86,97,054/- under section 271(1)(c) was deleted by the Commissioner of Income-tax (Appeals). The grounds of appeal raised by the Assessing Officer questioned the deletion of the penalty, alleging that the assessee had furnished inaccurate particulars of income, thereby concealing its true income. The CIT(A) had deleted the penalty based on the ITAT order dated 14.06.2019, which was challenged by the department in the High Court. The CIT(A) had also deleted the penalty concerning the allocation of loss option premium to the SEZ unit. The ITAT had restored the issue of the allocation of loss to the Assessing Officer for denovo adjudication. The order of the CIT(A) deleting the penalty was upheld, concluding that there was no infirmity in the decision. Issue 2: Disallowance under Section 10A of the Act The assessee had filed its return of income for the Assessment Year 2011-12, claiming deduction under Section 10AA of the Act. The assessment order disallowed the deduction under Section 10A, leading to penalty proceedings initiated by the Assessing Officer. The CIT(A) confirmed the disallowance under Section 10A and the addition on account of loss on option premium allocated to the SEZ unit. However, the penalty was deleted by the CIT(A) based on subsequent developments in the ITAT order and the restoration of certain issues to the Assessing Officer for reconsideration. Issue 3: Addition on account of loss on option premium allocated to SEZ unit One of the grounds for the penalty levied under section 271(1)(c) was the addition of loss on option premium allocated to the SEZ unit. The ITAT had remanded this issue back to the Assessing Officer for denovo adjudication. The CIT(A) deleted the penalty concerning this addition, as it was subject to further examination by the Assessing Officer. The decision to delete the penalty was upheld, considering the ongoing process of reconsideration by the Assessing Officer. In conclusion, the ITAT Mumbai upheld the decision of the CIT(A) to delete the penalty under section 271(1)(c) of the Income Tax Act, 1961, based on the specific circumstances of the case and the developments in the ITAT orders. The penalty was deemed not applicable due to the deletion of certain additions/disallowances and the remand of specific issues back to the Assessing Officer for fresh consideration.
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