The present appeal under Sec. 260A of the Income Tax Act, 1961 arises out of the common order dated 21.01.2011 of the Income Tax Appellate Tribunal, Bench 'A', Ahmedabad passed in ITA No. 3615 of 2008 and 3616 of 2008, and relates to in so far as the said common order decides ITA No. 3615 of 2008 for Assessment Year 2003-2004. 1.1 The following question is raised by the appellant proposing it as a substantial question of law in this Tax Appeal.
“Whether the Appellate Tribunal is right in law and on facts in canceling the penalty of Rs. 57,15,119/- levied by the Assessing Officer under section 271(1)(c)?”
2. We heard learned advocate Ms. Paurami Sheth for the appellant.
3. The relevant facts are that the assessment against the respondent assessee was finalized for the Assessment Year 2003- 2004 determining the total income. The book profit under section 115JB of the Income Tax Act, 1961 (hereinafter referred to as 'the Act, for sake of brevity) came to be worked out. The assessee had claimed the deduction under Section 80-IA of the Act. The Assessing Officer disallowed the total claim and made addition to the tune of Rs. 39,97,148/- on account of electricity charges treating it as an excess claim for deduction. Similarly amount of Rs. 1,15,54,196/- was also added on account of exclusion of interest for computing deduction under the said provision.
4. The Assessing Officer levied penalty of Rs. 57,15,119/- under section 271(1)(c) of the Act by order dated 25.03.2008. The Commissioner of Income Tax (Appeals) deleted the penalty allowing the appeal of the assessee by order dated 12.08.2008. Thereafter, Revenue preferred appeal before Income Tax Appellate Tribunal which culminated into the impugned order.
5. On consideration of the impugned order and the facts on record, it could be seen that when the Assessing Officer and the CIT(A) passed their respective orders with regard to the imposition of penalty, the quantum appeal of the assessee being I.T.A NO. 2072 of 2006 for the Assessment Year 2003-2004 was pending before the Tribunal. That quantum appeal came to be allowed for the reasons recorded therein.
6. In the above light, the Tribunal was right in observing and holding in the impugned order as under :
“It is pertinent to note that ITA in quantum appeal has virtually restored the issue regarding quantum of explosion interest to the file of A.O.. However, the addition made on excessive deduction claimed u/s 80IA in respective Captive Power Plant has been deleted. Be that it may be we are of the view that in respect of both the additions, penalty u/s 271(1)(C) is not leviable keeping in view the ratio of judgment of the Hon'ble Supreme Court in the case of Reliance Petrol Products Pvt. Ltd.”
6.1 The deletion of additions by the Tribunal in the quantum appeal preferred by the assessee was decisive. The Tribunal correctly placed reliance on the decision of the Supreme Court in Reliance Petrol Products Ltd. (322 ITR 158) that making incorrect claim by itself does not amount to concealment of income. When the quantum appeal itself was allowed and the deletions made were set aside, the whole basis which led to the imposition of penalty ceased to exist. In the circumstances, no ground could survive to sustain the penalty.
6.2 The present Appeal does not raise any substantial question of law in the light of above position of facts.
7. The appeal is accordingly dismissed.
[V.M.SAHAI, J.]
[N.V.ANJARIA, J.]
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