Penalty under section 271(1)(c) deleted where section 68 addition removed - no basis remains for penalty ITAT held the penalty under section 271(1)(c) must be deleted because the corresponding quantum addition under section 68 (unexplained cash credits) was ...
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Penalty under section 271(1)(c) deleted where section 68 addition removed - no basis remains for penalty
ITAT held the penalty under section 271(1)(c) must be deleted because the corresponding quantum addition under section 68 (unexplained cash credits) was already deleted in the assessee's related appeal; therefore no basis remains for the penalty. The tribunal applied higher-court precedent to conclude that once the substantive addition is removed, the consequential penalty cannot stand, and allowed the assessee's appeal.
This appeal under section 271(1)(c) for Assessment Year 2008-09 challenges CIT(A)/NFAC order DIN No. ITBA/NFAC/S/250/2024-25/1067767980(1) dated 20.08.2024. The Tribunal notes that a prior coordinate bench in ITA No. 5366/Del/2019 (order dated 07.03.2022) had already deleted the corresponding quantum addition of Rs. 50,00,000/- characterized as unexplained cash credits under section 68. Relying on the principle in K. C. Builders v. ACIT (2004) 265 ITR 562 (SC), the Tribunal holds that "the impugned penalty has no less to stand" once the quantum addition is deleted. On that precise legal basis, the penalty under section 271(1)(c) is set aside and the appeal is allowed. Order pronounced in open court on 07/01/2025.
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