This case involves Agroha Fincap Ltd, a company based in New Delhi, appealing against the penalty imposed by the Income Tax Officer (ITO), Ward 1(4), Delhi. The appeal pertains to the Assessment Year 2011-12 and was heard by the Income Tax Appellate Tribunal, Delhi Bench.
The dispute originated from a penalty levied under section 271(1)(c) of the Income Tax Act, 1961, related to quantum additions that were subsequently deleted by the Tribunal. The penalty was assessed by the National Faceless Appeal Centre (NFAC), New Delhi.
During the proceedings, the counsel for Agroha Fincap argued that since the quantum additions for which the penalty was based had been deleted by an earlier Tribunal order, the penalty itself was no longer justifiable. The Departmental Representative did not present a substantial argument against this claim.
The Tribunal agreed with the assessee’s argument, stating that since the underlying quantum additions had been deleted, the basis for the penalty under section 271(1)(c) was no longer valid. Consequently, the penalty was ordered to be deleted.
This decision underscores the principle that penalties dependent on specific adjustments or additions must be reconsidered if those adjustments or additions are overturned. The outcome is significant as it highlights the importance of aligning penalties with the substantive outcomes of related quantum appeals.
ITA No. 1975/DEL/2022: Agroha Fincap Ltd vs ITO – Penalty Appeal for AY 2011-12
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