Case Number: ITA 1509/DEL/2020
Appellant: DCIT Circle-13(2), New Delhi
Respondent: JDC Traders Ltd, New Delhi
Assessment Year: 2007-08
Result: Penalty Deleted
Case Filed On: 2020-08-28
Order Type: Final Tribunal Order
Date of Order: 2022-11-18
Pronounced On: 2022-11-18
The case of DCIT Circle-13(2) vs. JDC Traders Ltd. revolves around the challenge to the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2007-08. This case was brought before the Income Tax Appellate Tribunal (ITAT) Delhi Benches “C”, where the appeal by the Revenue was heard and subsequently dismissed.
JDC Traders Ltd., the respondent, filed its return of income for the assessment year 2007-08 on October 30, 2007, declaring a total income of Rs. 65,33,380/-. The initial assessment was completed under section 143(3) of the Income Tax Act on October 30, 2009, with the same total income of Rs. 65,33,380/-.
Later, the case was reopened under section 147 by issuing a notice under section 148. The reassessment was completed on November 14, 2012, determining the total income at Rs. 70,11,410/-. An additional order under section 154 of the Income Tax Act on January 3, 2014, revised the total income to Rs. 1,04,65,381/-. Following these additions, a penalty of Rs. 14,09,219/- was imposed by the Assessing Officer (A.O.) on March 28, 2017, under section 271(1)(c) for concealing income.
Aggrieved by the penalty order, JDC Traders Ltd. appealed to the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) deleted the penalty on January 31, 2020, noting that the quantum additions were nullified by the ITAT’s earlier order dated October 11, 2019. Hence, the penalty could not stand.
Not satisfied with the CIT(A)’s order, the Revenue appealed to the ITAT. The case was heard on November 3, 2022, and the order was pronounced on November 18, 2022. The appeal was presented before the Delhi Benches “C” of the ITAT, comprising Shri Anil Chaturvedi (Accountant Member) and Shri Anubhav Sharma (Judicial Member).
The Revenue was represented by Shri Anuj Garg, Senior Departmental Representative (D.R.), while there was no appearance from the assessee’s side. The ITAT proceeded with the hearing ex-parte, considering the material on record and the submissions of the Learned D.R.
The ITAT observed that the CIT(A) had deleted the penalty based on the fact that the quantum additions were nullified by the ITAT’s earlier order. The Revenue did not present any evidence to show that the quantum order granting relief to the assessee had been set aside, stayed, or overruled by any higher judicial authority. Therefore, the ITAT found no reason to interfere with the CIT(A)’s order and confirmed the deletion of the penalty.
The primary legal contention in this case was whether the penalty imposed under section 271(1)(c) could be sustained when the underlying quantum additions had been deleted. The ITAT referred to its earlier order dated October 11, 2019, where the quantum additions were nullified, which effectively meant that the basis for the penalty did not exist anymore.
The CIT(A) had relied on this order to delete the penalty, and the ITAT found that there was no new evidence or legal argument presented by the Revenue to counter this finding. The legal principle upheld here is that penalties cannot be sustained in the absence of substantive additions or when such additions are nullified by higher judicial authorities.
The ITAT upheld the CIT(A)’s decision to delete the penalty imposed under section 271(1)(c) for the assessment year 2007-08. The appeal filed by the Revenue was dismissed.
Order:
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open Court on November 18, 2022.
Sd/- Anubhav Sharma, Judicial Member
Sd/- Anil Chaturvedi, Accountant Member
Copy to:
// By Order //
Assistant Registrar, ITAT Delhi Benches, Delhi
DCIT Circle-13(2) vs. JDC Traders Ltd.: Challenge on Penalty Imposition for Assessment Year 2007-08
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