2015 (10) TMI 1473 - AT - Income Tax

Penalty under section 271(1)(c) deleted by ITAT based on quantum additions.

The ITAT upheld the deletion of the penalty under section 271(1)(c) by the Ld. CIT(A) based on the quantum additions sustained and modified during the ... Penalty u/s. 271(1)(c) - addition u/s. 2(24) - CIT(A) deleted the penalty levy - Held that:- Addition directed to be made u/s. 2(24) by the Ld. CIT(A) was deleted. We also find that as the quantum addition has been deleted, the penalty relating thereto does not survive and was rightly deleted, which does not need any interference on our part, hence, we uphold the decision of the Ld. CIT(A) on this issue. Addition on account of scrap sales - Held that:- ITAT vide order restored the matter to the AO with the direction to decide the same after giving the assessee a reasonable opportunity of hearing in this regard. We note that as the quantum addition has been restored to the AO for fresh decision, the penalty imposed relating thereto was rightly cancelled by the Ld. CIT(A). - Decided in favour of assessee. Issues involved:Appeal against deletion of penalty u/s. 271(1)(c) - Quantum additions sustained by Ld. CIT(A) - Validity of penalty imposed by AO - Appeal before ITAT - Deletion of penalty by Ld. CIT(A) - Quantum addition u/s. 2(24) - Scrap sales addition - Restoration of matter by ITAT - Leviability of penalty under section 271(1)(c).Analysis:Issue 1: Appeal against deletion of penalty u/s. 271(1)(c)The Revenue filed an appeal challenging the deletion of penalty u/s. 271(1)(c) by the Ld. CIT(A). The penalty was imposed by the AO based on certain additions and disallowances made during the assessment. The Ld. CIT(A) deleted the penalty in dispute after considering the quantum additions and the order of the ITAT. The ITAT upheld the decision of the Ld. CIT(A) stating that as the quantum addition u/s. 2(24) was deleted, the penalty relating thereto does not survive. The ITAT found no reason to interfere with the Ld. CIT(A)'s decision and dismissed the Revenue's appeal.Issue 2: Quantum additions sustained by Ld. CIT(A)The Ld. CIT(A) sustained certain additions and disallowances made by the AO during the assessment proceedings. The additions included an amount under section 69C and scrap sales. However, the Ld. CIT(A) modified the quantum of additions, directing a lesser amount to be added u/s. 2(24) and upholding only a portion of the scrap sales addition. These quantum additions formed the basis for the penalty proceedings initiated by the AO.Issue 3: Restoration of matter by ITATThe ITAT, in a previous order dated 17.5.2012, had restored the matter regarding a specific addition to the AO for a fresh decision after providing the assessee with a reasonable opportunity of hearing. Consequently, the penalty imposed relating to this specific quantum addition was rightly cancelled by the Ld. CIT(A) as the matter was pending fresh adjudication by the AO.Issue 4: Leviability of penalty under section 271(1)(c)The ITAT, after thorough examination of the assessment order, penalty order, and submissions by both parties, concluded that the penalty under section 271(1)(c) was not leviable in the present case. The ITAT upheld the decision of the Ld. CIT(A) to delete the penalty, emphasizing that the penalty does not survive when the quantum additions are deleted or set aside. The ITAT dismissed the Revenue's appeal, affirming the Ld. CIT(A)'s decision to delete the penalty.In conclusion, the ITAT upheld the deletion of the penalty u/s. 271(1)(c) by the Ld. CIT(A) based on the quantum additions sustained and modified during the assessment proceedings. The ITAT found no grounds to interfere with the Ld. CIT(A)'s decision and dismissed the Revenue's appeal, deciding the issue against the Revenue.