2016 (5) TMI 859

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....el. FOR THE RESPONDENT : CM No. 17985 of 2016(exemption) 1. Allowed subject to all just exceptions. ITA No. 313 of 2016 2. This appeal by the Revenue is against the order dated 19th October 2015 passed by the Income Tax Appellate Tribunal ('ITAT') in ITA No.4539/Del/2013 for the Assessment Year ('AY') 2007-08.  3. By the impugned order the ITAT affirmed the order of the Comm....

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....is not a case where a penalty was leviable under Section 271(1) (c) of the Act.  4. Mr. P.Roy Chaudhuri, learned counsel for the Revenue urged that while additions of Rs. 12.77 lakhs may have been the basis of the estimated gross profit rate, the disallowance of loss of Rs. 55,53,994 was not based on any estimate, therefore the penalty could not be deleted. He further submitted that the IT....

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....eleted the addition made by AO and instead made an addition of Rs.  68,31,196 in the manner and for the reasons noted hereinabove. This order of the CIT (A) stood affirmed by the ITAT when it dismissed the Revenue's quantum appeal.  6. Despite the basis for issuance of the penalty notice under Section 271 (1) (c) having disappeared with the deletion by the CIT (A) of the addition ....

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.... legal infirmity in the analysis or conclusion reached by the ITAT. Once the assessment order of the AO in the quantum proceedings was altered by the CIT (A) in a significant way, the very basis of initiation of the penalty proceedings was rendered non-existent. The AO could not have thereafter continued the penalty proceedings on the basis of the same notice. Also, the Court concurs with the CIT ....