2023 (8) TMI 506 - AT - Income Tax

Penalty u/s 271(1)(c) - Enhancement order u/s 252(2) of CIT - Action of the lower authorities for making additions on the ground other than recorded reasons - HELD THAT - Admittedly in quantum proceedings the addition, which was the basis for imposing impugned penalty u/s 271(1)(c) of the Act, has since been deleted by the Coordinate Bench of this Tribunal vide its order 2023 (6) TMI 668 - ITAT DELHI . Therefore, since the very basis for levy of penalty has gone, the impugned penalty levied u/s 271(1)(c) of the Act cannot survive and stands deleted accordingly - Appeal of the assessee is allowed.

Summary

Issues involved:
The judgment deals with an appeal against a penalty order u/s 271(1)(c) of the Income-tax Act, 1961, pertaining to the assessment year 2009-10.

Details of the Judgment:

Issue 1: Challenge to Penalty Order
The appeal challenges the penalty order imposed u/s 271(1)(c) of the Income-tax Act, 1961, based on an addition to the income. The counsel for the assessee argued that since the impugned addition was deleted in quantum proceedings by the Tribunal, no penalty should be applicable.

Issue 2: Tribunal's Decision
After hearing both parties, the Tribunal noted that the addition, which formed the basis for the penalty, had been deleted in the quantum proceedings by the Coordinate Bench of the Tribunal. Consequently, the Tribunal ruled that as the grounds for imposing the penalty were no longer valid, the penalty u/s 271(1)(c) could not be sustained and was therefore deleted. The appeal of the assessee was allowed, and the order was pronounced in open court on 7th August, 2023.