2019 (5) TMI 1497 - AT - Income Tax

Appeal successful: Penalty for income concealment deleted due to lack of proper adjudication

The appellant challenged the penalty confirmed by the CIT(A) under section 271(1)(c) of the Act for A.Y. 2009-10, alleging lack of proper adjudication and ... Penalty u/s 271(1)(c) - Addition u/s 68 - HELD THAT:- As quantum proceeding has been set aside by the Hon’ble ITAT in the assessee’s own case for the A.Y.2009-10 [2015 (9) TMI 1651 - ITAT MUMBAI] and the issue has been remanded before the AO, therefore, in the said circumstances, the penalty is not liable in sustainable in the eyes of law. As the quantum is nowhere in existence, therefore, the penalty has no leg to stand. - Decided in favour of assessee. Issues:1. Confirmation of penalty by CIT(A)2. Failure to provide supporting evidence3. Assessment of total income and penalty levied under section 271(1)(c) of the ActIssue 1: Confirmation of penalty by CIT(A)The assessee appealed against the penalty confirmed by the CIT(A) under section 271(1)(c) of the Act for the A.Y. 2009-10. The grounds raised by the assessee included challenges to the CIT(A)'s decision, arguing that the penalty was upheld without proper adjudication on certain grounds. The appellant contended that the assessing officer did not provide a finding on whether there was concealment of income or inaccurate particulars, rendering the order illegal. Additionally, the appellant claimed reasonable cause for failure to submit supporting evidence and lack of opportunity during the penalty proceedings. The CIT(A) upheld the penalty, citing concealment of income by reducing taxable income. The appellant sought relief to delete the penalty and requested further amendments or submissions if necessary.Issue 2: Failure to provide supporting evidenceThe case involved the assessee's failure to prove the identity, capacity, and genuineness of loan transactions, leading to additions in income. Similarly, expenses claimed by the assessee were disallowed due to lack of evidence, resulting in an assessment of total income at a specific amount. Subsequently, penalty proceedings under section 271(1)(c) of the Act were initiated, and a penalty was levied. The appellant challenged the penalty, arguing that the quantum proceedings had been set aside by the ITAT in a previous case, making the penalty unsustainable. The ITAT reviewed the findings and concluded that since the quantum order was not in existence, the penalty could not stand, ultimately deleting the penalty.Issue 3: Assessment of total income and penalty leviedThe assessee's return of income for the relevant year declared total income as Nil, which was subject to scrutiny assessment. Various liabilities and expenses were questioned by the authorities due to lack of evidence and support. The assessment resulted in additions to the income, leading to the initiation of penalty proceedings under section 271(1)(c) of the Act. The CIT(A) confirmed the penalty, prompting the assessee to appeal. The ITAT, upon review, found that the quantum order was non-existent, rendering the penalty baseless. Consequently, the penalty was deleted, and the appeal was allowed in favor of the assessee.This detailed analysis of the legal judgment covers the issues involved comprehensively, highlighting the key arguments, decisions, and outcomes in a structured manner.