Tribunal upholds deletion of penalty under section 271(1)(c) for AY 2012-13, citing removal of basis for penalty.

The Tribunal upheld the Ld.CIT(A)'s decision to delete the penalty under section 271(1)(c) of the Act for the Assessment Year 2012-13. The Tribunal ruled that since the basis for the penalty was removed by the deletion of additions/disallowances in the quantum proceedings, the penalty could not be sustained. As a result, the appeal of the Revenue was dismissed, affirming the deletion of the penalty by the Ld.CIT(A).

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Issues:
Appeal against deletion of penalty u/s. 271(1)(c) of the Act by Ld.CIT(A) based on Tribunal's deletion of additions/disallowances in quantum proceedings.

Analysis:
The Revenue filed an appeal against the Ld.CIT(A)'s order deleting the penalty u/s. 271(1)(c) of the Act for the Assessment Year 2012-13. The crux of the Revenue's grievance was that the Ld.CIT(A) had annulled the penalty on the grounds that the quantum additions/disallowances were expunged by the Hon'ble ITAT in a previous order. The assessee contended that since the Tribunal had nullified the additions/disallowances in the quantum proceedings, the penalty under section 271(1)(c) would not be tenable. The Tribunal had previously deleted the additions/disallowances, emphasizing the validity of purchases and sales, and rejecting the estimation of profit without a basis. The Ld.CIT(A) relied on the Tribunal's decision and the Supreme Court's ruling in KC Builders to delete the penalty, citing that if the additions forming the basis of the penalty were nullified, the penalty itself would become infructuous. The Ld.CIT(A) referenced various similar decisions to support the deletion of the penalty, emphasizing that if the assessment itself is set aside, the penalty cannot stand. The Tribunal upheld the Ld.CIT(A)'s decision, stating that since the basis for the penalty was removed by the Tribunal's deletion of additions/disallowances, the penalty could not be sustained. Consequently, the appeal of the Revenue was dismissed, affirming the deletion of the penalty by the Ld.CIT(A).

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