Penalty deleted due to inaccurate income particulars; underlying additions nullified.

The ITAT dismissed the Revenue's appeal, upholding the deletion of a penalty for furnishing inaccurate income particulars. The penalty was deleted as the quantum addition was set aside for re-examination, following the principle that if the basis for the penalty is nullified, the penalty cannot stand alone. This decision was supported by legal precedent, emphasizing that the penalty for concealment cannot be sustained if the underlying additions are cancelled or set aside.

---

---

Issues:
1. Deletion of penalty for furnishing inaccurate particulars of income.
2. Deletion of penalty while quantum of addition was sustained.

Analysis:

Issue 1: Deletion of penalty for furnishing inaccurate particulars of income
The case involved an appeal by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)-Rohtak regarding the deletion of a penalty amounting to Rs. 43,15,142/- for furnishing inaccurate particulars of income. The Assessing Officer had made an addition of Rs. 1,39,64,857/-, which was confirmed by the Ld. CIT(A). Subsequently, a penalty under section 271(1)(c) was imposed by the AO, which was challenged by the assessee before the Ld. CIT(A) and was deleted. The ITAT noted that the issues regarding the quantum addition had been set aside by a previous order of ITAT. The ITAT held that since the quantum addition had been set aside, the penalty under section 271(1)(c) could not stand. Citing the judicial precedent in the case of K.C. Builders vs. ACIT, the ITAT concluded that when the basis for the penalty is set aside, the penalty itself cannot survive. Therefore, the appeal by Revenue was dismissed, and the penalty deletion was upheld.

Issue 2: Deletion of penalty while quantum of addition was sustained
The second ground of appeal by Revenue was related to the deletion of the penalty by the Ld. CIT(A) while the quantum of addition was sustained. The ITAT considered the earlier order where the issues regarding the quantum addition were set aside for re-examination by the Assessing Officer. The ITAT observed that when the quantum addition was set aside, the penalty imposed on the corresponding addition could not be sustained. Referring to the principle established in the case of K.C. Builders vs. ACIT, the ITAT reiterated that if the additions forming the basis for the penalty are set aside, the penalty itself cannot survive. Therefore, the ITAT dismissed the appeal by Revenue, upholding the deletion of the penalty by the Ld. CIT(A).

In conclusion, the ITAT dismissed the appeal by Revenue, emphasizing that when the quantum additions forming the basis for the penalty were set aside for re-examination, the penalty itself could not be sustained. The decision was based on the principle that if the additions are cancelled or set aside, the penalty for concealment cannot stand on its own. The ITAT relied on legal precedent to support its decision, ultimately upholding the deletion of the penalty by the Ld. CIT(A).

---