ACIT Vs Saurabh Gupta (ITAT Agra)
The Income Tax Appellate Tribunal, Agra dismissed the Revenue’s appeals and upheld deletion of penalties levied under sections 271D and 271E of the Income-tax Act, 1961, holding that penalties cannot survive independently when the underlying quantum additions have been deleted. The case related to Assessment Year 2015–16, where assessment was completed under section 143(3) read with section 153C following a search under section 132 in BNR Group cases. During assessment, the Assessing Officer treated alleged cash loans received and repaid as unexplained money under section 69A and made additions aggregating to ₹2.94 crore. Based solely on these additions, penalties equal to the amounts of alleged cash receipts and repayments were imposed for violation of sections 269SS and 269T.
On appeal, the Commissioner of Income-tax (Appeals) deleted the penalties after noting that the very additions on which the penalties were founded had already been deleted in quantum proceedings. The Revenue challenged this deletion, contending that penalty proceedings are independent of assessment proceedings and that the quantum additions were wrongly deleted.
The Tribunal observed that it was undisputed that the quantum additions had been deleted by the first appellate authority and that such deletion had already been confirmed by the Tribunal in earlier proceedings. The penalties under sections 271D and 271E were purely consequential and entirely dependent on the additions made in assessment. Relying on the decision of the Supreme Court in K.C. Builders vs. ACIT, the Tribunal reiterated that when the additions forming the basis of penalty are deleted, the foundation for levy of penalty ceases to exist.
