Vimal Alloys Pvt. Ltd. Vs DC/ACIT (ITAT Chandigarh)
Chandigarh ITAT Deletes Penalty as Quantum Itself Vanished- Fresh Assessment Accepted Returned Income:
Assessee had originally filed return declaring income of Rs. 62,43,060/-, whereas the AO, in assessment u/s 143(3), enhanced the income to Rs. 1,09,53,555/-. Based on this addition, a penalty @ 200% amounting to Rs. 32,49,546/- was levied. CIT(A) later reduced the penalty to Rs. 16,24,773/-.
However, in quantum proceedings, the earlier assessment was set aside by Tribunal (ITA 275/CHD/2019, order dated 24-05-2022). AO thereafter passed a fresh assessment order u/s 143(3) r.w.s 254 dated 27-02-2024, wherein no addition was made & the income was finally assessed exactly at the returned figure of Rs. 62,43,060/-.
Tribunal held that once the revised assessment has accepted the returned income in full, the very foundation of penalty disappears. Under Sec. 271(1)(c), penalty can be levied only where tax is sought to be evaded on additions made to income on account of concealment or furnishing of inaccurate particulars. Since no addition survived, the “charge” of concealment itself became non-existent. Hence, no penalty could legally continue.
Accordingly, Tribunal deleted the entire penalty, allowing the Assessee’s appeal in full.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
