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TMI Blog2017 (4) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... s afresh for penalty, after the decision of the Hon’ble High Court in the quantum Appeals and subject to the decision that may be taken by the Hon’ble High Court in the quantum Appeals considering section 275 (1A) of the Income Tax Act and as and when such proceedings are considered the same may be considered in accordance with law and on merits. - TAX APPEAL NO. 828 of 2016, TAX APPEAL NO. 829 of 2016, TAX APPEAL NO. 830 of 2016, TAX APPEAL NO. 852 of 2016 - - - Dated:- 21-3-2017 - M. R. SHAH And B.N. KARIA, JJ. Mr Km Parikh, Advocate for the Appellant Mr Sn Soparkar, Senior Counsel With Mr B S Soparkar, Advocate for the Opponent JUDGMENT ( PER : HONOURABLE MR.JUSTICE M.R. SHAH ) 1. As common questions of law and facts arise in these group of Appeals and are with respect to the same assessee but for different Assessment Years, all these Appeals are disposed of by this common judgment and order. 1.1 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal (herein after referred to as the ITAT ) in ITA No.179/Mum/2014 for the A.Y. 2004-2005 by which the learned ITAT has dismissed the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) Whether on the facts and circumstances of the case and in law, the ITAT was justified in holding that Penalty is not leviable in respect of disallowance u/s. 80IB of the Act on account of raw material purchases as it is merely a claim which is found to be not sustainable in law , without appreciating that the A.O. had clearly established that the assessee had furnished inaccurate particulars of income liable for penalty u/s. 271(1)(c) of the Act? (c) Whether on the facts and circumstances of the case and in law, the ITAT was justified in holding that Since the addition on account of notional selling and distribution has been deleted in quantum proceedings, the penalty order passed with respect to such addition has no legs to stand , without appreciating that the issue involved has not attained finality, since the revenue s appeal against the order of ITAT Mumbai deleting quantum addition on the issue of selling and distribution expenses in the assessee s case for A.Y. 2006-07 is pending for adjudication before Hon ble High Court of Mumbai? (d) Whether on the facts and circumstances of the case and in law, the ITAT was justified in deleting the penalty u/s. 271(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d dissatisfied with the impugned judgment and order passed by the learned ITAT in ITA No. 182/Mum/2014 for the A.Y. 2008-2009 by which the learned ITAT has dismissed the said Appeal preferred by the Revenue and has confirmed the order passed by the learned C.I.T.(A) deleting the penalty imposed under Section 271(1)(c) of the Act, Revenue has preferred Tax Appeal No. 852 of 2016 with the following proposed questions of law: (a) Whether on the facts and circumstances of the case and in law, the ITAT was justified in holding that Since the addition on account of notional selling and distribution has been deleted in quantum proceedings, the penalty order passed with respect to such addition has no legs to stand , without appreciating that the issue involved has not attained finality since the Dept s appeal against the order of ITAT Mumbai deleting quantum addition on the issue of selling and distribution expenses in the assessee s case for A.Y. 2006-07 is pending for adjudication before Hon ble High Court of Mumbai? (b) Whether on the facts and circumstances of the case and in law, the ITAT was justified in law in deleting the penalty u/s. 271(1)(c) of the Act on the issue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008-09 45,91,02,595 - 64963 2.2 It is not in dispute that against the aforesaid disallowances / additions made by the Assessing Officer, the assessee preferred Appeals before the learned C.I.T(A). It is not in dispute that the learned C.I.T.(A) allowed the Appeals preferred by the assessee and set aside the disallowances / additions made by the Assessing Officer. It is also not in dispute that the Appeals preferred by the Revenue before the learned ITAT, against the respective orders passed by the learned C.I.T(A), have been dismissed by the learned ITAT. However, it is required to be noted that the quantum Appeals, against the orders passed by the learned ITAT, are pending before Hon ble the Bombay High Court. 2.3 On the disallowances / additions made by the Assessing Officer while passing the assessment orders for respective Assessment Years, the Assessing Officer imposed the penalty under Section 271(1)(c) of the Act with respect to the disallowances made by the Assessing Officer while passing / framing the original assessment. On Appeals preferred by the assessee before the learned C.I.T.(A), the learned C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is submitted that therefore when the addition of notional selling and distribution has been deleted in the quantum proceedings, the learned ITAT has rightly observed and held that penalty order passed in respect of such additions (which has been deleted by the learned ITAT) cannot be sustained. It is submitted that similarly even with respect to the disallowances under Section 80IB on account of raw material purchase has been deleted by the learned ITAT, and therefore also, the penalty imposed with respect to such disallowances also cannot be sustained. It is submitted therefore, in the facts and circumstances of the case, the learned ITAT has not committed any error in deleting the penalty imposed in respect of such additions / disallowances. 4.2 Now so far as the submissions on behalf of the Revenue that with respect to the quantum proceedings, Appeals are pending before Hon ble the Bombay High Court, and therefore, the present Appeals be admitted and considered only after the decision of Hon ble the Bombay High Court in the quantum proceedings is concerned, Shri Soparkar, learned senior counsel appearing on behalf of the assessee has brought the attention of the Court to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of notional selling and distribution expenses and also on account of raw material purchase. The Assessing Officer also made the disallowances under Section 80IB on account of interest income on bank deposit / staff loan claimed by the assessee. However, it is required to be noted that in the quantum proceedings the additions made on account of notional selling and distribution expenses and also the additions made on account of raw material purchase have been deleted by the learned C.I.T.(A) in respect of Appeals preferred by the assessee and the same have been confirmed by the learned ITAT. The Assessing Officer imposed the penalty under Section 271(1)(c) of the Act with respect to the aforesaid additions. The learned C.I.T.(A) as well as the learned ITAT have deleted the penalty imposed on such additions on the ground that in the quantum proceedings the additions made on account of notional selling and distribution expenses and the addition made on account of raw material purchase have been deleted by the learned ITAT, and therefore, since the addition on account of aforesaid additions / disallowances have been deleted in quantum proceedings, the penalty order passed with respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of revision under section 263 or section 264 is passed, an order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty may be passed on the basis of assessment as revised by giving effect to such order of the Commissioner (Appeals) or, the Appellate Tribunal or the High Court, or the Supreme Court or order of revision under section 263 or section 264: Provided that no order of imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty shall be passed- (a) unless the assessee has been heard, or has been given a reasonable opportunity of being heard; (b) after the expiry of six months from the end of the month in which the order of the Commissioner (Appeals) or the Appellate Tribunal or the High Court or the Supreme Court is received by the [Principal Chief Commissioner or] Chief Commissioner or the [Principal Commissioner] Commissioner or the order of revision under section 263 or section 264 is passed: Provided further that the provisions of sub-section (2) of section 274 shall apply in respect of the order imposing or enhancing or reducing pe ..... 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