2022 (4) TMI 613 - AT - Income Tax

Penalty levied u/s. 271(1)(c) - HELD THAT - The re-assessment proceedings under Section 147/148 of the Act have been held to be void-ab-initio and the additions made in quantum proceedings 2020 (8) TMI 896 - ITAT MUMBAI stand deleted. Penalty order has no legs to stand. We do not find any infirmity in the order, passed by the CIT(A) deleting penalty levied under Section 271(1)(c) of the Act. - Decided in favour of assessee.

Summary

Issues:
1. Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961 by the Commissioner of Income Tax (Appeals)-47, Mumbai.
2. Validity of deleting penalty based on the Tribunal's order in the quantum appeal.
3. Assessment proceedings under Section 147/148 declared void-ab-initio leading to deletion of additions in quantum proceedings.

Analysis:

Issue 1:
The appeal filed by the Revenue challenges the deletion of penalty under section 271(1)(c) by the Commissioner of Income Tax (Appeals)-47. The Tribunal considered the grounds of appeal raised by the Revenue, questioning the CIT(A)'s decision without examining the merits of the case. The Departmental Representative argued that the issue was not final in quantum proceedings, emphasizing that the Tribunal's order in the quantum appeal did not reach finality. On the contrary, the Assessee's Authorized Representative contended that since the Tribunal held the re-assessment proceedings void-ab-initio, the penalty could not be sustained.

Issue 2:
The Tribunal reviewed the order passed by the CIT(A) based on the Tribunal's decision in the quantum appeal. The Tribunal noted that the quantum appeal for A.Y. 2009-10 was allowed, resulting in the deletion of the addition made by the Assessing Officer. The CIT(A) justified the deletion of the penalty by referring to the Tribunal's order, which declared the re-assessment proceedings as void-ab-initio. The Tribunal upheld the CIT(A)'s decision, stating that the penalty levy under Section 271(1)(c) was appropriately deleted due to the void-ab-initio nature of the assessment proceedings.

Issue 3:
The Tribunal analyzed the Tribunal's order in the quantum appeal, where it was concluded that the re-assessment proceedings under Section 147/148 were void-ab-initio. As a result, the additions made in the quantum proceedings were deleted. The Tribunal affirmed that the penalty order, based on the now-invalid assessment, could not be sustained. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the deletion of the penalty under Section 271(1)(c) by the CIT(A) due to the void-ab-initio status of the assessment proceedings.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the deletion of the penalty under section 271(1)(c) by the CIT(A) based on the Tribunal's declaration of the re-assessment proceedings as void-ab-initio.