Penalty for assessment years deleted by Tribunal due to deletion of additions in quantum appeal

The penalty levied under section 271(1)(c) for assessment years 2011-12 and 2012-13 was deleted by the CIT(A) and upheld by the Tribunal. The Tribunal ruled that when additions are deleted in the quantum appeal, penalties cannot be sustained. The appeals filed by the Revenue for both assessment years were dismissed, as no basis existed for the penalty due to the deletions made in the assessment orders.

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Issues:
The judgment deals with the penalty levied under section 271(1)(c) for assessment years 2011-12 and 2012-13 based on disallowances made during assessment under section 143(3).

For Assessment Year 2011-12:
The assessee, a subsidiary of a company involved in sports-related activities, filed returns showing losses and nil income for A.Y. 2011-12 and 2012-13 respectively. The Assessing Officer disallowed various expenses and initiated penalty proceedings under section 271(1)(c) for furnishing inaccurate particulars. The penalty was levied, but the CIT(A) deleted it considering relief granted by the Tribunal in the quantum appeal. The Revenue appealed, arguing that the quantum appeal was not final, but the assessee contended that when disallowances are deleted in the quantum appeal, penalty proceedings cannot continue. The Tribunal noted that the additions were deleted in the assessment order and held that no basis existed for the penalty. The appeal for AY 2011-12 was dismissed.

For Assessment Year 2012-13:
The CIT(A) also deleted the penalty for AY 2012-13 based on similar grounds as for AY 2011-12. The Tribunal upheld the decision, stating that when additions are deleted in the quantum appeal, penalties cannot be sustained. As the facts were identical to AY 2011-12, the decision to delete the penalty for AY 2012-13 was upheld. The appeals filed by the Revenue were dismissed for both assessment years.

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