Tax Penalty Removed: ITAT Directs Deletion of Section 271(1)(c) Penalty for AY 2009-10 Due to Vacated Quantum Addition.

The ITAT, Raipur allowed the appeal, directing the deletion of the penalty imposed under section 271(1)(c) for AY 2009-10. The penalty was initially confirmed by the CIT(A) based on a quantum addition by the AO, which was later vacated by the ITAT. Since the basis for the penalty no longer existed, the penalty was deemed arbitrary and unsustainable, leading to its deletion.

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Issues:
The case involves an appeal against the order of Commissioner of Income Tax (Appeals) regarding the imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2009-10.

Issue 1 - Arbitrary Order of CIT(A):
The appellant contended that the order of the Ld. Commissioner of Income Tax (Appeals) was arbitrary, bad in law, and facts.

Issue 2 - Confirmation of Penalty by CIT(A):
The Ld. CIT(A) confirmed the levy of penalty under section 271(1)(c) imposed by the Ld. Assessing officer, which was challenged by the appellant.

Facts and Decision:
The appellant, an individual, filed the return of income for the AY 2009-10 and was subjected to scrutiny assessment under section 143(3). The Ld. AO made a disallowance under section 54B of the IT Act, which was challenged before the Ld. CIT(A) and subsequently before the ITAT, Raipur. The ITAT decided in favor of the assessee, leading to the deletion of the quantum addition that formed the basis for the penalty under section 271(1)(c). Despite the penalty order, the ITAT held that since the quantum addition had been vacated, the penalty could not be sustained. The penalty was thus directed to be deleted, and the appeal of the assessee was allowed.

Significant Points:
- The penalty initiated by the Ld. AO was deemed arbitrary and bad in law.
- The penalty was imposed based on the quantum addition, which was later vacated by the ITAT.
- The Ld. CIT(A) confirmed the penalty, but the ITAT ruled in favor of the assessee due to the deletion of the quantum addition.
- The penalty under section 271(1)(c) was directed to be deleted, considering the circumstances where the basis for the penalty no longer existed.

Conclusion:
The ITAT, Raipur allowed the appeal of the assessee, directing the deletion of the penalty imposed under section 271(1)(c) for the assessment year 2009-10.

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