Penalty under section 271(1)(c) deleted as addition was overturned by ITAT

The Tribunal upheld the decision of the Ld. CIT(A) to delete the penalty under section 271(1)(c) in a case where the addition made by the Assessing Officer had been deleted by the ITAT. The Tribunal concluded that since the addition was deleted, the penalty was not sustainable, leading to the dismissal of the Revenue's appeal against the impugned order.

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Issues:
1. Deletion of penalty under section 271(1)(c) by Ld. CIT(A) when the matter related to quantum addition is sub-judice.
2. Validity of penalty imposed under section 271(1)(c) by the Assessing Officer.
3. Appeal against the impugned order dated 29.6.2016 passed by Ld.CIT(A)-26, New Delhi.

Analysis:

Issue 1: Deletion of penalty under section 271(1)(c) by Ld. CIT(A) when the matter related to quantum addition is sub-judice.
The case involved an appeal by the Revenue against the order of Ld. CIT(A) deleting the penalty under section 271(1)(c). The Assessing Officer had imposed a penalty of Rs. 37,38,718/- for furnishing inaccurate particulars of income. However, the Ld. CIT(A) deleted the penalty citing that the addition made by the AO in the order under section 143(3) had been deleted by the ITAT, rendering the penalty unsustainable. The Ld. CIT(A) held that as the addition was deleted, the penalty did not survive. The Tribunal upheld the decision of the Ld. CIT(A) based on the ITAT order, concluding that the penalty was not sustainable.

Issue 2: Validity of penalty imposed under section 271(1)(c) by the Assessing Officer.
The Assessing Officer imposed the penalty under section 271(1)(c) after finding that the assessee had furnished inaccurate particulars of income and concealed income. The assessee contended that the activities were in line with the aims and objectives of the society, and the penalty was not justified. However, the AO found the explanation of the assessee neither correct nor bonafide. The Ld. CIT(A) deleted the penalty based on the deletion of the addition by the ITAT, leading to the Tribunal upholding the decision, stating that the penalty was not sustainable.

Issue 3: Appeal against the impugned order dated 29.6.2016 passed by Ld.CIT(A)-26, New Delhi.
The Revenue appealed against the impugned order dated 29.6.2016 passed by Ld.CIT(A)-26, New Delhi. The Tribunal, after hearing both parties and examining the records, upheld the decision of the Ld. CIT(A) to delete the penalty under section 271(1)(c). The Tribunal found that since the addition on which the penalty was imposed had been deleted by the ITAT, the penalty did not survive. Therefore, the Tribunal dismissed the appeal of the Revenue, affirming the decision of the Ld. CIT(A) to delete the penalty.

In conclusion, the Tribunal dismissed the Revenue's appeal against the impugned order dated 29.6.2016 passed by Ld.CIT(A)-26, New Delhi, upholding the deletion of the penalty under section 271(1)(c) based on the deletion of the addition by the ITAT, rendering the penalty unsustainable.

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