2023 (3) TMI 1305 - AT - Income Tax

Penalty u/s 271(1)(c) - Quantum addition deleted - HELD THAT - Where the whole of the addition have been deleted in the quantum proceedings by the CIT(A) and which has attained finality as per records, we agree with the contention of the Ld. AR that very foundation for levy of penalty no more exist. Hence the penalty so levied is hereby directed to be deleted as pronounced in the Open Court. Appeal of the assessee is allowed.

Summary

Issues Involved:
- Appeal against order confirming penalty u/s 271(1)(c) of the Act for A.Y. 2007-08.

Summary:
The appeal was filed by the Assessee against the order of the Ld. CIT(A)-3, Ludhiana confirming the penalty u/s 271(1)(c) of the Act for A.Y. 2007-08. The case was reopened u/s 147 based on cash deposits in the Assessee's bank account. An ex-parte assessment order was passed making an addition of Rs. 28,84,000 as income from undisclosed sources. Penalty proceedings were also initiated u/s 271(1)(c). The Assessee did not appear during penalty proceedings, and the penalty order was passed holding concealment of income. The Ld. CIT(A) confirmed the penalty due to non-appearance and non-compliance by the Assessee. The Assessee appealed against this decision.

During the appeal hearing, it was revealed that the Ld. CIT, Panchkula had deleted the entire addition made by the AO in the quantum proceedings subsequent to the penalty order. The Ld. CIT(A), Panchkula accepted the Assessee's explanation with documentary evidence regarding the source of cash deposits. As a result, the entire addition was deleted, and the penalty foundation was considered invalid. The Tribunal agreed that the penalty should be deleted as the basis for its levy no longer existed. Consequently, the appeal of the Assessee was allowed, and the penalty was directed to be deleted.