2017 (4) TMI 726 - AT - Income Tax

Tribunal cancels penalty under Income Tax Act, citing deletion of quantum additions.

The Tribunal allowed the Assessee's appeal, canceling the penalty imposed under section 271(1)(c) of the Income Tax Act. The Tribunal found that since the ... Penalty u/s 271(1)(c) - Disallowance of advertising and publicity expenses - non deduction of tds u/s 194A - Held that:- We find that the additions on which the penalty in dispute was levied, has already been deleted by the ITAT (AY 2007-08) in assessee’s own case [2016 (9) TMI 556 - ITAT DELHI ] hence, the penalty in dispute will not survive. Accordingly, we cancel the orders of the authorities below and delete the penalty in dispute - Decided in favour of assessee. Issues:- Appeal against penalty under section 271(1)(c) of the Income Tax Act- Disallowance of expenses of Advt & Publicity and interest paid- Validity of penalty imposition- Quantum additions and subsequent penalty impositionAnalysis:1. The Assessee challenged the penalty imposed under section 271(1)(c) of the Income Tax Act, contending that no concealment or inaccurate particulars were furnished, thus seeking deletion of the penalty. The Assessee argued that disallowance of expenses and interest paid did not amount to concealment, citing genuine business exigencies. Additionally, reference was made to a High Court judgment to support the claim that no penalty should be levied in such circumstances.2. The assessment resulted in additions on account of disallowance of expenses of Advt & Publicity and interest paid, leading to the imposition of a penalty under section 271(1)(c). The Assessee's appeal before the Ld. CIT(A) was dismissed, upholding the penalty order.3. During the hearing, the Assessee's representative highlighted that the quantum additions, forming the basis for the penalty, were previously deleted by the ITAT in a separate case related to the Assessee. The representative requested the deletion of the penalty based on this development.4. The Tribunal reviewed the submissions and records, noting that the ITAT had already deleted the quantum additions in a previous order related to the Assessee's case. The Tribunal reproduced relevant portions of the earlier order, emphasizing the reasons for deleting the additions. Consequently, the Tribunal found that since the additions forming the basis of the penalty had been deleted, the penalty itself could not be sustained.5. Ultimately, considering the facts and circumstances along with the previous decision of the ITAT, the Tribunal canceled the penalty imposed by the authorities below and allowed the Assessee's appeal. The Tribunal's decision was based on the deletion of quantum additions in the earlier ITAT order, rendering the penalty unjustified.6. The Tribunal's final pronouncement on 13/04/2017 resulted in the Assessee's appeal being allowed, thereby annulling the penalty imposed under section 271(1)(c) of the Income Tax Act.