The Delhi Bench of the Income Tax Appellate Tribunal( ITAT ) held that the penalty under section 271(1)(c) of the Income Tax Act would not stand where quantum addition made is already deleted by a competent authority.
The ruling was laid by the Tribunal while adjudicating the appeal filed by RBJ Infratech Pvt. Ltd. challenging the order of CIT(A) upholding the imposition of penalty under Sec. 271(l)(c) of the Income Tax Act. During the course of hearing, the Appellant submitted that the quantum addition made by the Assessing Officer, upon which penalty was levied was already deleted by the Co-ordinate Bench of ITAT, Delhi and hence the penalty should also be deleted.
The said contention was accepted by the Tribunal comprising Judicial Member Kuldip Singh and Accounting Member Anadee Nath Misshra, held that “After hearing both sides, we are of the view that penalty U/s 271(1)(c) of I.T Act levied by AO has no legs to stand at present, when the corresponding additions made by the AO have already been deleted by ITAT vide its aforesaid order dated 22.12.2020 when the aforesaid quantum addition does not survive, the penalty levied U/s 271(1)(C) of I.T. Act on the corresponding quantum addition also cannot survive.”
In holding thus, the tribunal relied on the decision in K.C. Builders vs. ACIT in which the Hon’ble Apex Court held that where the additions made in the Assessment Order, on the basis of which penalty for concealment was levied, are deleted, by ITAT or otherwise, the penalty cannot stand by itself and is liable to be canceled.
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