2022 (11) TMI 715 - AT - Income Tax

Penalty imposed u/s 271(1)(c) - AO levied penalty after feeling satisfied that the assessee has concealed its income and thus furnished inaccurate particulars of its income - CIT-A deleted the penalty - HELD THAT - A s quantum addition on the basis of which penalty proceedings were initiated, has been deleted. Therefore, we do not see any good reason to interfere in the finding of the learned CIT(Appeals) and the same is hereby affirmed. Revenue s appeal is dismissed.

Summary

Issues:
- Deletion of penalty imposed under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
The appeal before the Appellate Tribunal ITAT Delhi involved the deletion of a penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2008-09. The Revenue challenged the order of the Commissioner of Income-tax (Appeals) regarding the deletion of the penalty. The key issue was whether the penalty was rightly deleted by the CIT(A) despite the Assessing Officer's satisfaction of income concealment and inaccurate particulars. The Tribunal noted that the CIT(A) deleted the penalty based on the deletion of the quantum addition. The Tribunal examined the arguments presented by the Departmental Representative (DR) and observed that the CIT(A) deleted the penalty due to the deletion of the quantum addition. The Tribunal further analyzed the order of the Hon'ble ITAT, which had allowed the appeal filed by the assessee, leading to the deletion of the addition made by the Assessing Officer. The Tribunal highlighted the reasoning provided by the Hon'ble ITAT in support of deleting the addition, emphasizing the adherence to accounting policy principles by the assessee. The Tribunal also considered the DR's submission supporting the assessing authority's order but ultimately affirmed the CIT(A)'s decision to delete the penalty based on the deletion of the quantum addition.

The Tribunal found that the quantum addition, which formed the basis for initiating the penalty proceedings, had been deleted by the Hon'ble ITAT. Consequently, the Tribunal concluded that there was no valid reason to interfere with the CIT(A)'s finding and upheld the decision to delete the penalty. The Tribunal emphasized that since the quantum addition had been deleted, the penalty imposed under section 271(1)(c) of the Act could not be sustained. Therefore, the Tribunal directed the Assessing Officer to cancel the impugned penalty order. The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to delete the penalty. The order was pronounced during the hearing, and the appeal against the penalty order for the assessment year 2008-09 was allowed.

In summary, the Appellate Tribunal upheld the deletion of the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2008-09. The Tribunal based its decision on the deletion of the quantum addition by the Hon'ble ITAT, concluding that the penalty could not be sustained in the absence of the underlying addition. The Tribunal affirmed the CIT(A)'s decision and directed the Assessing Officer to cancel the penalty order, ultimately dismissing the Revenue's appeal.