The present appeal by the Revenue arises out of order dated 19.01.2012 of the Income Tax Appellate Tribunal, Ahmedabad Bench ‘D’, passed in ITA No. 3118 of 2010 for the Assessment Years 2004-2005. 1.1 Following questions are raised by the appellant proposing them to be substantial questions of law.
“(i) Whether the Tribunal has substantially erred in law and on facts in deleting the penalty under Section 271(1)(c) of the Act, levied on account of excess depreciation claimed amounting to Rs.3,52,78,787/- and whether the Tribunal erred in not considering Explanation-1 to Section 271(1)(c) of the Act?”
(ii) Whether the Tribunal has substantially erred in law and on facts in deleting the penalty under Section 271(1)(c) of the Act, levied in respect of disallowance of deduction under Section 80IA on new Power Plant of Rs.7,66,69,274/- and whether the Tribunal has substantially erred in ignoring the mandate of Explanation-1 to Section 271(1)(c) of the Act?”
(iii) Whether the Tribunal has substantially erred in law and on facts in deleting the penalty under Section 271(1)(c) of the Act, levied in respect of disallowance of claim under Section 801B of Rs.99,54,440/- stating that the issue of deduction was highly debatable, ignoring the aspect that the Hon'ble Apex Court interprets the law as it is, and once it renders judgments, the debate, if any ceases to exist?”
2. We have heard Learned Senior counsel Shri M.R.Bhatt assisted by Ms. M.M.Bhatt, learned advocate for the appellant.
2.1 The issue relates to penalty of Rs. 5,01,89,014/- levied as per order dated 24/3/2009 under section 271(1)(c) of the Income Tax Act Act, 1961 (hereinafter referred to as 'the act' for sake of brevity). The said penalty was owing to additions made by the Assessing Officer in the income of the assessee while considering his return of income for the assessment year 2004-2005. The first addition was in respect of excess depreciation claimed by the asessees for Rs. 3,52,78,787/-. The second was the deduction of Rs. 7,63,69,274/- claimed under section 80IA of the Act in respect of new power plant. The third was a claim under section 80IB of the Act for Rs. 99,54,440/- which was an excess claim. Yet another and last addition was in connection with transferring pricing difference under section 92C for Rs. 1,82,97,194/-
2.2 The assessee preferred an appeal before the Commssioner of Income Tax(A). The CIT(A) confirmed the penalty on only transfer Pricing difference u/s 92C of the Act and deleted the balance penalty resulting in reduction of penalty to the extent of Rs. 4,36,24,896/- (confirmed only Rs. 65,64,118/-) 2.4 The department preferred appeal before Income Tax Appellate Tribunal. The Tribunal confirmed the order of the CIT(A).
3. At the threshold of the hearing, learned senior counsel fairly submitted that the quantum additions which were the basis for imposition of the penalty were deleted in Tax Appeal No. 2533 of 2009 preferred by the department which was dismissed. The oral order dated 04/04/2011 in that tax appeal reads as under :
“Leave to amend.
Revenue is in appeal against judgment of the tribunal dated 24.7.2009 raising following question for our consideration :
“Whether the Appellate Tribunal is right in law and on facts in deleting the penalty levied u/s.271(1)(c) of the I.T. Act?”
As is apparent from the question raised, issue pertains to penalty under Section 271(1)(c) of the Income Tax Act. CIT(Appeals) as well as tribunal deleted the penalty finding that the assessee's claim was based on legal decisions. Previously also assessee had made such claims. Issue is therefore, debatable one. CIT(Appeals) as well as tribunal both concurrently found that there was no concealment of income or filing of inaccurate particulars in return and when it was found that claim ultimately though not accepted was one of debatable nature, deletion of penalty in our view will not give rise to substantial question of law.
Tax Appeal is therefore, dismissed.”
3.1 When the quantum of additions on which the imposition of penalty was rested, have themselves been deleted, the whole premise for penalty falls to the ground. No justification survives for imposition of penalty.
4. In the aforesaid view, the order of the Tribunal was quite justified. Therefore, no interference is called for. No substantial question of law arises for consideration.
5. Accordingly, the appeal is dismissed.
[V.M.SAHAI, J.] [N.V.ANJARIA, J.] cmjoshi