The case ITA No. 5298/DEL/2019 involves appellant NHPC Ltd., a company based in Faridabad, contesting against the Additional Commissioner of Income Tax (ACIT), Circle-II, Faridabad, for the assessment year 2013-14. The appeal was filed on June 10, 2019, against the order of the CIT(A), New Delhi, dated April 23, 2019.
The appellant filed the appeal challenging the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. The penalty was based on the quantum addition made during the assessment, which the appellant argued was unjustified.
The tribunal hearing was held on May 5, 2022, with the order pronounced on May 20, 2022. The counsel for the appellant, Shri Ashish Goel, argued that the quantum addition, which was the basis for the penalty, had already been deleted by the ITAT in ITA No. 5211/Del/2016 vide order dated February 17, 2021. The Department’s representative, Ms. Pramita M. Biswas, supported the AO’s decision but acknowledged the deletion of the quantum addition.
The quantum addition was initially made by the AO during the assessment proceedings for the assessment year 2013-14. The addition was contested by NHPC Ltd. and was ultimately deleted by the ITAT in a prior ruling. This deletion formed the basis for the current appeal against the penalty imposed under Section 271(1)(c).
The appellant argued that since the quantum addition, which was the sole reason for the penalty, had been deleted, the penalty under Section 271(1)(c) could not be sustained. The appellant emphasized that penalties should not be imposed when the foundational addition has been nullified.
The tribunal, consisting of Accountant Member Dr. B.R.R. Kumar and Judicial Member Shri Anubhav Sharma, decided in favor of the appellant. They noted that the quantum addition had already been deleted by the ITAT, making the penalty under Section 271(1)(c) unsustainable. The tribunal, therefore, ordered the deletion of the penalty.
This decision underscores the importance of the foundational basis for penalties under tax laws. The case of NHPC Ltd. demonstrates that when the primary addition is deleted, any subsequent penalties based on that addition must also be reconsidered and, where appropriate, deleted.
Deletion of Penalty: NHPC Ltd. vs ACIT, Circle-II, Faridabad for A.Y. 2013-14
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