Penalty deletion upheld for AY 2004-05 and 2005-06. Coordinate Bench accepts appeal against disallowance.

The appeals against the deletion of penalty under section 271(1)(c) for AY 2004-05 and 2005-06 were rejected, and the deletion of the penalty was upheld. The High Court found that there was no basis for the penalty due to the outcome of the quantum proceedings. The Coordinate Bench accepted the assessee's appeal against disallowance, leading to the justification for deleting the penalty by the CIT (A).

---

---

Issues:
Appeal against deletion of penalty u/s 271(1)(c) for AY 2004-05 and 2005-06.

Analysis:
1. Assessment Proceedings and Reopening Notice:
- AO allowed deduction u/s 80-IB but later withdrew it due to the project being residential cum commercial.
- Reassessment order confirmed by Ld. CIT (A).

2. Penalty Proceedings:
- AO imposed penalty for furnishing inaccurate particulars of income.
- Relied on Supreme Court judgment in CIT vs. Dharmendra Processors.
- Assessee appealed against penalty order.

3. Appellant's Arguments:
- Assessee's conduct covered by penalty provisions.
- Relied on penalty order findings.

4. Respondent's Arguments:
- Disallowance deleted in quantum proceedings by Mumbai ITAT and High Court.
- Penalty lacks basis due to quantum proceedings' outcome.

5. Judgment and Findings:
- Coordinate Bench accepted assessee's appeal against disallowance.
- High Court upheld Coordinate Bench order.
- No basis for penalty under section 271(1)(c) due to quantum proceedings' outcome.
- CIT (A) justified in deleting penalty.
- Appeals rejected, penalty order deletion upheld.

This detailed analysis of the judgment highlights the sequence of events, arguments presented by both parties, findings of the courts, and the ultimate decision to reject the appeals and uphold the deletion of the penalty under section 271(1)(c) for the assessment years in question.

---