Penalty not leviable when Assessment itself is Quashed: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) in Sh. Ravinder Taneja v. ACIT, held that the Penalty imposed on the assessee becomes invalid since the assessment under Section 158BC of the Income Tax Act has already been deleted.

In the instant case, an assessment under the above provision was passed by the Revenue against the assessee, an individual in consequent to the search proceedings. The assessee filed appeal before the Ld. CIT(A) against the quantum proceedings, which was dismissed. The further appeal filed by the assessee before the Tribunal was dismissed on account of non-prosecution by the assessee. In view of the facts, a show cause notice was served to the assessee for levying penalty under section 158 BFA(2) of the Act. The assessee the same on the ground of no proper satisfaction recorded, difference of opinion etc. however, the Assessing Officer rejected the submission of the assessee and levied penalty of Rs.23,45,262/-. On further appeal, the Ld. CIT(A) upheld the penalty levied.

Before the Tribunal, the assessee contended that the Tribunal, while considering the appeal against the addition, held that in absence of search warrant against the assessee, it was beyond jurisdiction of the Assessing Officer to complete assessment under section 158BC of the Income Tax Act and hence the assessment was held as void-ab-initio.

In view of the above finding of the Tribunal, the bench noted that the assessment under section 158BC itself has been quashed, thus, the penalty levied in respect of the income assessed under said assessment order cannot survive.

“Accordingly, we set aside the order of the lower authorities and cancel the penalty levied under section 158BFA(2) of the Act. All the grounds of the appeal are accordingly allowed,” the bench said.