Penalty under Income Tax Act deleted for fresh examination, Revenue's appeal dismissed.

The ITAT upheld the decision of the Ld. CIT(A) to delete the penalty of Rs. 1,23,23,258/- as the basis for the penalty levy was set aside for fresh examination. The Revenue's appeal was dismissed, affirming the deletion of the penalty under section 271(1)(c) of the Income Tax Act for Assessment Year 2008-09.

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Issues:
Challenge of deletion of penalty under section 271(1)(c) of the Income Tax Act by the Revenue for Assessment Year 2008-09.

Analysis:
1. Background: The Revenue challenged the deletion of penalty of Rs. 1,23,23,258/- imposed under section 271(1)(c) by the Ld. CIT(A) for Assessment Year 2008-09.

2. Assessment Proceedings: An addition of Rs. 61,06,26,670/- was made by the Assessing Officer in the assessment proceedings under section 143(3). Penalty proceedings were separately initiated under section 271(1)(c).

3. Deletion of Addition: The Ld. CIT(A) deleted the addition to the extent of Rs. 57,15,59,130/-, which related to a claim under section 80IA for a power plant and disallowance of interest in relation to investments with subsidiary companies.

4. Levy of Penalty: After a fresh show cause notice and considering the submissions, the AO levied a penalty of Rs. 1,23,23,258/-, holding that inaccurate particulars of income were furnished by the assessee.

5. Appellate Proceedings: The assessee appealed to the Ld. CIT(A), referencing a Co-ordinate Bench order in quantum proceedings. The matter was set aside for fresh examination by the Assessing Officer.

6. Legal Precedents: The Ld. CIT(A) referred to legal authorities, including a Supreme Court judgment and a Rajasthan High Court decision, emphasizing that if the basis for penalty levy is set aside by a higher judicial authority, the penalty cannot stand.

7. Decision: Considering the legal precedents, the Ld. CIT(A) held that if the basis for penalty levy is set aside, the penalty cannot survive. Thus, the penalty of Rs. 1,23,23,258/- was directed to be deleted.

8. Appeal: The Revenue appealed before the ITAT, with the Ld. DR supporting the AO's order.

9. ITAT's Finding: The ITAT reviewed the findings of the Coordinate Bench in the quantum proceedings, which set aside the matters for fresh examination by the AO. As the basis for penalty levy was set aside, the ITAT dismissed the Revenue's appeal.

10. Conclusion: The ITAT upheld the Ld. CIT(A)'s decision to delete the penalty, as the basis for the penalty levy was set aside for fresh examination. The appeal of the Revenue was dismissed, affirming the deletion of the penalty.

This detailed analysis provides a comprehensive overview of the legal judgment involving the challenge of deletion of penalty under section 271(1)(c) of the Income Tax Act for Assessment Year 2008-09.

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