2024 (7) TMI 1281 - AT - Income Tax

Penalty u/s 271(1)(c) - claim of the assessee respondent as regards deductions claimed u/s 54B allowed - HELD THAT - Admittedly, the quantum addition, on being challenged by the assessee before this Appellate Tribunal has been set aside 2019 (8) TMI 983 - ITAT JAIPUR filed by the assessee and thereby allowing deductions claimed u/s 54B of the Act. When the claim of the assessee as regards deductions u/s 54B of the Act has been allowed by this Appellate Tribunal subsequent to passing of the order of penalty there is merit in the contention raised on behalf of the assessee that the penalty order has been rightly set aside by CIT(A). Decided in favour of assessee.

Summary

Issues Involved:
Appeal against penalty order under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
1. The Revenue appealed against the order dated 27.04.2024 passed by the Learned CIT(A), NFAC, Delhi, under section 250 of the Income Tax Act, 1961, feeling aggrieved by the setting aside of the penalty order under section 271(1)(c) of the Act. The Appellate Tribunal had upheld the assessee's claim for deductions under section 54B of the Act, leading to the setting aside of the quantum addition.

2. The Assessing Officer had levied a penalty of Rs. 1,11,10,900/- under section 271(1)(c) for furnishing inaccurate particulars of income without reasonable cause for the assessment year 2013-14. The assessee had challenged the assessment before the Learned CIT(A)-2, Jaipur, which was partly allowed due to calculation errors by the Assessing Officer.

3. The Assessing Officer issued a show cause notice to the assessee, who did not respond, leading to the imposition of the penalty. The assessee appealed before the Learned CIT(A), NFAC, and the appeal was allowed.

4. The Revenue contended that the quantum addition appeal was allowed by the Appellate Tribunal but challenged in the High Court. The department urged for the penalty order to be upheld, or alternatively, to keep the appeal in abeyance until the High Court's decision. However, there was no stay order from the High Court.

5. The assessee argued that the appeal was not maintainable under section 275(1A) of the Act. The Appellate Tribunal found merit in the appellant's contention that the provisions of section 275(1A) did not apply to the situation, making the appeal maintainable.

6. Since the Appellate Tribunal had allowed the deductions claimed by the assessee under section 54B of the Act after the penalty order was passed, the penalty order was rightly set aside by the Learned CIT(A). Consequently, the appeal filed by the Revenue was dismissed.

This detailed analysis of the legal judgment provides a comprehensive understanding of the issues involved and the reasoning behind the decision to dismiss the appeal against the penalty order.