Tribunal upholds deletion of penalty under IT Act for AY 2012-13. Revenue's appeal dismissed.

The Tribunal dismissed the revenue's appeal against the deletion of a penalty under section 271(1)(c) of the IT Act for the assessment year 2012-13. The penalty was initially imposed by the AO based on an addition that was later deleted by the Tribunal in the quantum appeal. The Tribunal held that since the basis for the penalty was eliminated, there was no justification for the penalty. The revenue's challenge was solely on the grounds of the Tribunal's order not being accepted, but as there was no evidence of reversal by the High Court, the deletion of the penalty was upheld.

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Issues Involved:
Appeal against penalty order under section 271(1)(c) of the IT Act for the assessment year 2012-13.

Analysis:
The appeal by the revenue challenged the order of the ld. CIT (A)-1, Jaipur dated 20th August, 2018 regarding the deletion of penalty under section 271(1)(c) of the IT Act amounting to Rs. 26,00,670. The key issue was whether the ld. CIT (A) was justified in deleting the penalty when the quantum addition by the ITAT in ITA No. 284/JP/2017 had not been accepted on merits. The penalty was initially levied by the AO against the addition on account of the determination of ALV of the property under section 23(1)(a) of the Act. However, the ld. CIT (A) deleted the penalty considering that the addition itself was deleted by the Tribunal in the quantum appeal.

The Tribunal noted that the penalty was imposed based on the addition that was later deleted by the Tribunal in the quantum appeal. Citing the case of K.C. Builders vs. ACIT, it was emphasized that if the additions forming the basis of the penalty are deleted, there is no basis for the penalty. The Tribunal found that no penalty could be justified based on adhoc disallowance without substantial evidence. The revenue did not challenge the deletion of the addition by the Tribunal but contested the cancellation of the penalty solely on the grounds of the Tribunal's order not being accepted by the revenue.

The Tribunal emphasized that since the addition itself was deleted by the Tribunal and there was no evidence of reversal by the High Court, the penalty under section 271(1)(c) had no basis to stand. Consequently, the appeal of the revenue was dismissed, upholding the deletion of the penalty under section 271(1)(c) of the IT Act for the assessment year 2012-13.

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