2012 (7) TMI 1087

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....l filed on 30.04.2012 by the Revenue against an order dated 14.02.2012 of the ld. CIT(A)-III, New Delhi, raises the following grounds:- "1 On the facts and circumstances of the case, CIT(A) has erred in law and on facts in cancelling the penalty imposed by the Assessing Officer u/s 271(1(c) on account of disallowance of Rs. 2,53,02,920/- u/s 14A of the Income-tax Act, 1961, read with Rule....

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....ember, 2007 in pursuance to return declaring income of Rs.Rs.5,45,00,000/- and exempted income of Rs.Rs.276,75,30,877/- Inter alia, an amount of Rs.Rs.4,69,15,726/-was disallowed u/s 94(7) of the Act as against disallowance of Rs. 2,95,03,308 offered by the assessee besides disallowance of Rs.Rs.30,26,725/- in terms of provisions of sec.14A of the Act. Penalty proceedings u/s 271(1)(c) of the Act ....

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.... 4 The Revenue is now in appeal before us against the aforesaid findings of the ld. CIT(A). At the outset, both the parties are agreed that the aforesaid two additions, forming the basis of aforesaid penalty, having been set aside by the ITAT vide their decision dated 9.3.12 in quantum appeal in ITA no.2003/Del/2009 to the file of the AO for re-adjudication, penalty does not survive at this stage.....

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....ribunal or otherwise, the penalty cannot stand by itself and the same is l iable to be cancel led. Hon'ble Delhi High Court in the case of CIT Vs. R.Dalmia,(1992)107 Taxation 107, held that no penalty survives af ter delet ion of additions, forming the basis for the levy of penalty. Similar view was taken in Addl. Commissioner of Income tax v. Badri Kashi Prasad (1993] 200 ITR 206 (Al l) and Prabh....