IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 336 of 2011 For Approval and Signature:
HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE N.V. ANJARIA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
Whether this case involves a substantial question 4 of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
========================================================= COMMISSIONER OF INCOME TAX-III - Appellant(s) Versus KARSANBHAI KHODIDAS PATEL - Opponent(s) ========================================================= Appearance :
MR.VARUN K.PATEL for Appellant(s) : 1, MRS SWATI SOPARKAR for Opponent(s) : 1, =========================================================
CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI
and HONOURABLE MR.JUSTICE N.V. ANJARIA Date : 09/08/2012 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE N.V. ANJARIA) In this appeal by the Revenue directed against order dated 06.08.2010 of the Income Tax Appellate Tribunal, Bench `A', Ahmedabad in Income Tax Appeal No.1439 of 2010, following question has been raised by the appellant proposing it as substantial question of law:-
“Whether the Appellate Tribunal is right in law and on facts in deleting the penalty levied u/s.271(1)(c) of the act?”
2. We have heard learned advocate Mr. Varun Patel for the appellant and learned Senior counsel Mr. S.N. Soparkar, assisted by Mr. Bandish Soparkar and Mrs. Swati Soparkar, who appeared for the respondents.
3. The issue in the appeal is confined to the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as `the Act' for the sake of brevity).
4. While finalizing the assessment of the assessee for the assessment year 2004-05, the Assessing Officer made addition of Rs.87,47,522/- on account of accrued interest on DDBs. In the penalty proceedings initiated on that basis a penalty of Rs.28,86,700/- was levied by order dated 24.03.2009. It appears that against the original order of assessment whereby the addition as aforesaid was made, the assessee had filed appeal and in that the Appellate Tribunal by its order dated 03.07.2009 passed in Income Tax Appeal No.4426 of 2007 directed the Assessing Officer to redecide the issue. It further appears that the Assessing Officer pursuant to that direction of the Tribunal, deleted the addition in question by order dated 29.09.2009 passed under section 143(3) read with section 254 of the Act.
5. The CIT(A) before whom the assessee had challenged the penalty order by his order dated 05.02.2010 ordered deletion of the penalty in view of the fact that the Assessing Officer had set set aside the original addition made. The order of the CIT(A) came to be upheld by the Income Tax Appellate Tribunal, by dismissing the appeal of the Department. That is how the Department is before this court.
6. The present appeal is completely misconceived in asmuch as the original addition by the Assessing Officer made on account of the accrued interest, which was the premise of the penalty proceedings and imposition of penalty, came to be deleted as aforesaid by the Assessing Officer as per his order dated 29.09.2009. As a result of that order giving effect to Tribunal's order, the addition itself was deleted. No ground survived thereafter for levy of any penalty. The Tribunal was eminently justified in observing that the penalty could not stand independent of the assessment. The penalty levied by the Assessing Officer could not sustain, having been rendered without any basis.
7. For the aforesaid reasons, the appeal is devoid of any merits. No question of law much less substantial question of law arises in the appeal. Accordingly the Tax Appeal is dismissed.
(V.M. SAHAI, J.) (N.V. ANJARIA, J.) (SN DEVU PPS)