2019 (1) TMI 1133 - AT - Income Tax

Levy of penalty u/s 271AAA, u/s 271(1)(c) and u/s 271(1)(c) - Assessment completed u/s 153B(1)(b) r.w.s. 143(3) of the Act in pursuance to search and seizure operation u/s 132(1) - Held that - Since it is an admitted fact that additions on which penalty had been levied in the present case on account of bogus labour charges and on account of unaccounted sale transactions have been restored back to the A.O. by the I.T.A.T. the additions no longer survive and, therefore, the basis for levy of penalty u/s 271AAA of the Act also does not survive. Penalty levied u/s 271(1)(c) - unaccounted receipts of the assessee from running of the resort - Held that - I.T.A.T. in the quantum proceedings held that it is a neutral preposition to confirm the addition and allow expenditure and the depreciation - in view of the peculiar facts and circumstances of the case the addition made by the Assessing Officer is liable to be deleted. Thus we find no reason to uphold the levy of penalty levied in the present case u/s 271(1)(c) of the Act. - Assessee appeal allowed.

Summary

Issues:
1. Confirmation of penalty u/s 271AAA, u/s 271(1)(c), and u/s 271(1)(c) by CIT(A).
2. Challenge of penalty levied under various sections.
3. Restoration of additions by ITAT.
4. Deletion of penalties by ITAT.

Analysis:
1. The appeals were filed against the orders of CIT(A) confirming penalties under different sections for the assessment years 2010-11 and 2011-12. The ITAT Chandigarh consolidated the appeals as they involved common issues related to penalty levies.

2. In ITA No.395/Chd/2018 for A.Y. 2010-11, the penalty u/s 271AAA was confirmed on additions related to bogus labour charges and unaccounted sales transactions. However, the ITAT restored the additions back to the AO, leading to the deletion of the penalties as the basis for penalty imposition ceased to exist.

3. The ITAT also deleted the penalty u/s 271(1)(c) in ITA No.396/Chd/2018 for A.Y. 2010-11 as the addition on unaccounted receipts from a resort was deleted in quantum proceedings, rendering the penalty unjustifiable.

4. Similarly, in ITA No.397/Chd/2018 for A.Y. 2011-12, the penalty u/s 271(1)(c) was challenged for unaccounted receipts from a resort, but the ITAT had already deleted the addition in quantum proceedings. Consequently, the penalty was directed to be deleted, resulting in the allowance of all three appeals filed by the assessee.

5. The ITAT Chandigarh pronounced the order in open court, emphasizing the deletion of penalties due to the restoration of additions by the ITAT, ultimately allowing all three appeals filed by the assessee.