Case Law Details
DCIT Vs ARSS Developers Limited (ITAT Cuttack)
In the case of DCIT Vs ARSS Developers Limited, the Income Tax Appellate Tribunal (ITAT) Cuttack upheld the decision of the Commissioner of Income Tax (Appeals) (CIT(A)) to delete a penalty of ₹3,08,11,278 levied under Section 271(1)(c) of the Income Tax Act for the assessment year 2014-15. The revenue had filed an appeal challenging the CIT(A)’s ruling, arguing that the deci-sion was erroneous and that the CIT(A) failed to consider an ongoing appeal before the Orissa High Court regarding the quantum of addition related to the case. However, the tribunal determined that the penalty could not be upheld due to the absence of the underlying quantum addition, which had already been deleted by the ITAT in a previous ruling.
The tribunal noted that the CIT(A) had rightly pointed out that the penalty proceedings could not be revived simply because the revenue had filed an appeal against the quantum addition. Since the quantum addition was no longer in existence, the ITAT found no basis for interfering with the CIT(A)’s decision to delete the penalty. Consequently, the appeal from the revenue was dismissed. This ruling reinforces the principle that penalties under Section 271(1)(c) cannot be imposed if the original basis for the penalty—the quantum addition—has been eliminated. The decision emphasizes adherence to procedural norms and the importance of resolving underlying substantive issues before imposing penalties in tax matters.
FULL TEXT OF THE ORDER OF ITAT CUTTACK
This is an appeal filed by the revenue against the order of the ld CIT(A), Bhubaneswar-2 dated 25.6.2024 in appeal No. NFAC/2013- 14/10055461 deleting the penalty levied u/271(1)(c) of the Act ofRs.3,08,11,278/- for the assessment year 2014-15.
2. Shri Sanay Kumar, ld CIT DR appeared for the revenue. None represented on behalf of the as-sessee. However, an application for adjournment ha s been filed. Since, the matter can be decided in the absence of the assessee, we reject the adjournment petition and proceed to dispose the appeal of the revenue.
3. The revenue has raised the following grounds:
1. The order of the ld CIT (A) is erroneous both on the facts and in law.
2. Whether on the facts and circumstances of the case, the ld CIT(A) is justified in not considering the fact that the department has filed an appeal before the Hon’ble High court, Orissa in ITA No.06/2022 against the impugned quantum of addition in the assessee’s case for the A.T. 2014015 and the same is pending for adjudication.”
4. A perusal of the order of the ld CIT(A) shows that the ld CIT(A) has deleted the penalty levied un-der section 271(1)(c) of the Act on the ground that ITAT vide its order dated 23.12.2021 in as-sessee’s case for the assessment year 2014-15 has deleted the quantum addition. Pendency of the revenue’s appeal before the Hon’ble Jurisdictional High Court in the quantum addition does not give ground for reviving the penalty proceedings. This being so, as the quantum addition no more exists, we are of the view that the order of the ld CIT(A) does not call for any interference.
5. In the result, appeal of the revenue stands dismissed.
Order dictated and pronounced in the open court on 23/9/2024.
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