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TMI Blog2020 (12) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... ELHI HIGH COURT ] has upheld the deletion of the penalty on the same ground i.e. the fact that appeals were admitted proved that the issue was debatable - No question of law. - HON'BLE MR. JUSTICE MANMOHAN AND HON'BLE MR. JUSTICE SANJEEV NARULA Appellant Through: Deepak Anand, Standing Counsel Respondent Through: None. J U D G M E N T MANMOHAN, J: (Oral) CM Appl. 30811/2019 in ITA 620/2019 CM Appl. 30813/2019 in ITA 622/2019 For the reasons stated in the applications, the delay is condoned and the applications stand disposed of. ITA 620/2019 and ITA 622/2019 1. Present appeals have been filed challenging the common order dated 22nd May, 2018 passed by the Income Tax Appellate Tribunal (ITAT), whereby the appeals filed by the respondent-assessee, being ITAs No.861/Del/2018 and No.862/Del/2018 for assessment years 2004-05 and 2005-06 respectively, have been allowed and the penalty amount added under Section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) has been deleted. 2. Since both the present appeals arise out of a common impugned order and raise identical questions of law, the same are being decided vide this common order. 3. Briefly stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reply to the notice, the Assessing Officer levied the penalties for relevant years vide order dated 20th March, 2014. 7. The said penalty order was challenged before the CIT(A), which confirmed the said order. Thereafter, it was challenged before the ITAT wherein the appeal of the assessee was allowed and the penalty amount was deleted vide the impugned order. The relevant portion of the impugned order is reproduced hereinbelow:- 10. We have carefully considered the orders of the lower authorities of assessment, penalty proceedings, and rival contentions placed before us. Undisputedly the additions have been confirmed in the hands of the assessee on the above stated facts up to the level of the coordinate bench. The Hon'ble high court has admitted the appeal of the assessee for assessment year 2004 - 05 on two counts, (1) on whether addition can be made in the hands of the assessee in absence of any incriminating material, (2) on merits of the addition of gross profit and investment initially allegedly made. Therefore, for assessment year 2004-05 it is apparent that Hon'ble high court has admitted the appeal of the assessee on legal grounds as well as on the merits of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court had after recording the fact that where appeals from orders in quantum proceedings of this Court have been admitted as giving rise to substantial question of law then that itself discloses that the issue is debatable. However, Mr. Singh points out that it also further records In our view there was no case made out for imposition of penalty and the same was rightly set aside. On the basis of the above observation, it is contention of Mr. Tejveer Singh that the appeal from penalty proceeding was not admitted by this Court as on merits no case for imposition of penalty was made out. 7. Mr. Dalal, the learned Counsel for the respondent-assessee invited our attention to the order of the Tribunal dated 18th March, 2011 in the case of Nayan Builders and Developers Pvt. Ltd. (supra). On perusal of the Tribunal order dated 18th March, 2011 we note that the Tribunal in Nayan Builders and Developers Pvt. Ltd (supra) had deleted the penalty only on the ground that as substantial question of law had been admitted by this Court in quantum proceedings the issue is debatable. It was on the basis of the aforesaid reasoning of the Tribunal in Nayan Builders and Developers Pvt. Ltd. (supra), t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 274 of the income tax act and find that for both the years the Ld. assessing officer has not cancelled one of the charge on the assessee. We have also perused the assessment orders for both the years wherein the Ld. assessing officer has also not levied any specific charge on the additions made but has simply stated that he is satisfied that the penalty proceedings under section 271(1)(c) should be initiated against the assessee company. Therefore we find that there is no specific charge levied by the assessing officer in the assessment orders as well as in the penalty notices but has levied the penalty on the assessee holding that assessee has furnished inaccurate particulars of his income. Therefore as held by Hon'ble Karnataka High Court in case of CIT versus SSA Emerald Meadows in 396 ITR 538 which held so and against which the Hon'ble Supreme Court has dismissed the special leave petition of the revenue in 73 Taxmann.com 248, we also hold that when in the show cause notice the Ld. assessing officer has failed to create a specific charge and which has also not been specified in the assessment order the penalty cannot be levied under section 271(1)(c) of the act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The relevant portion of the orders in CIT Vs. Liquid Investment Ltd (supra) and CIT Vs. Thomson Press India Ltd (supra) is reproduced hereinbelow:- A) Order dated 5th October, 2010 passed by this Court in CIT Vs. Liquid Investment Ltd (supra) :- Both the CIT(A) as well as the ITAT have set aside the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961 on the ground that the issue of deduction under Section 14A of the Act was a debatable issue. We may also note that against the quantum assessment where under deduction under Section 14A of the Act was prescribed to the assessee, the assessee has preferred an appeal in this Court under Section 260A of the Act which has also been admitted and substantial question of law framed. This itself shows that the issue is debatable. For these reasons, we are of the opinion that no question of law arises in the present case. B) Order dated 3rd March, 2014 passed by this Court in CIT Vs. Thomson Press India Ltd (supra) :- This Court is of the opinion that where the question of law as raised by the assessee has been framed and admitted in the circumstances of this case, imposition of penalty cannot be justi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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