2015 (6) TMI 891 - AT - Income Tax

Penalty u/s 271(1)(c) - CIT(A) deleted the addition - Whether an in situation can be treated as an educational institution and benefit of section 1O(23C)(iiiad) of the Act be allowed thereto without affiliation to CBSE or any other Board? - Held that - CIT(A) has considered the assessee s submission and perused the order of ITAT, Delhi granted the benefit of Section 10(23C)(iiiad) of the Income Tax Act to the assessee and after considering the entire facts and circumstances of the case he was agreed with the contention of the assessee that since the quantum appeal has been decided in favour of the assessee assessee, the very basis of A.O. passing penalty order u/s. 271(1)(c), also ceases to exist and therefore, the penalty order passed by the AO turns infructuous and thus deserves to be deleted, accordingly, the same rightly was deleted - Decided in favour of assessee.

Summary

Issues:
- Appeal against deletion of penalty under section 271(1)(c) by Ld. CIT(A) for Assessment Year 2003-04.
- Appeal against deletion of penalty under section 271(1)(c) by Ld. CIT(A) for Assessment Year 2002-03.

Analysis:
1. Appeal for Assessment Year 2003-04:
The Revenue filed an appeal against the deletion of penalty under section 271(1)(c) by the Ld. CIT(A) for the Assessment Year 2003-04. The case involved the receipt of a corpus fund in cash by the assessee society, leading to an escapement of income of &8377; 8,85,600. The AO imposed a penalty on the assessee for furnishing inaccurate particulars of income. However, the Ld. CIT(A) deleted the penalty after considering the ITAT's decision granting the benefit of Section 10(23C)(iiiad) to the assessee. The Ld. CIT(A) concluded that since the quantum appeal was decided in favor of the assessee, the basis for the penalty order under section 271(1)(c) ceased to exist. The Tribunal upheld the Ld. CIT(A)'s decision, stating that no interference was required, and dismissed the Revenue's appeal.

2. Appeal for Assessment Year 2002-03:
The appeal for Assessment Year 2002-03 was similar to the one for 2003-04. The Revenue challenged the deletion of penalty under section 271(1)(c) by the Ld. CIT(A). The case involved comparable facts regarding the receipt of corpus funds and the subsequent penalty imposition. Following the same reasoning as in the 2003-04 appeal, the Tribunal confirmed the Ld. CIT(A)'s decision to delete the penalty. The Tribunal upheld the action of the Ld. CIT(A) in deleting the penalty of &8377; 10,15,000 for Assessment Year 2002-03, deciding the issue against the Revenue and dismissing the appeal.

In both cases, the Tribunal found that the Ld. CIT(A) had correctly deleted the penalties under section 271(1)(c) based on the ITAT's decision and the favorable outcome of the quantum appeal for the assessee. The Tribunal concluded that the penalties were not sustainable due to the circumstances surrounding the receipt of corpus funds and the subsequent assessment proceedings.