Case Number: ITA 5978/DEL/2019
Appellant: Green Valley Infracity Pvt. Ltd., Noida
Respondent: ITO, Ward-1(4), Noida
Assessment Year: 2012-13
Order Type: Final Tribunal Order
Date of Order: 2021-06-08
Pronounced On: 2021-06-08
Introduction:
This case concerns an appeal filed by Green Valley Infracity Pvt. Ltd., Noida, challenging the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2012-13. The penalty was imposed following an enhancement of income by the Commissioner of Income Tax (Appeals) [CIT(A)] which was later contested and quashed by the Income Tax Appellate Tribunal (ITAT).
Background and Grounds of Appeal:
The appellant, Green Valley Infracity Pvt. Ltd., is a real estate development company. It filed its return of income for AY 2012-13 on 31st March 2014, declaring a total income of Rs. Nil. The case was selected for scrutiny, and the assessment was completed under Section 143(3) of the Income Tax Act, determining the total income at Rs. 6,00,200/-. Aggrieved by this order, the appellant appealed to the CIT(A), who significantly enhanced the income to Rs. 33,35,52,203/- by making various additions under Sections 68, 69, and 69C of the Act.
The appellant challenged this enhancement before the ITAT. The Tribunal set aside the CIT(A)’s order and directed a fresh examination of the issues. However, despite the Tribunal’s directions, the CIT(A) reaffirmed the enhanced income in a subsequent order. This led to the imposition of a penalty under Section 271(1)(c) of the Act, which the appellant contested in the present appeal before the ITAT.
Tribunal’s Analysis and Decision:
The ITAT heard the appeal on 3rd June 2021 and pronounced the order on 8th June 2021. The Tribunal noted that the CIT(A)’s enhancement order, which formed the basis for the penalty, had already been quashed by the ITAT in its order dated 2nd March 2020. The Tribunal found that since the enhancement itself was invalidated, the penalty based on that enhancement could not be sustained.
The Tribunal further observed that the penalty imposed by the CIT(A) was unjustified, given that the underlying additions to income were annulled. The Tribunal emphasized that when the very foundation of a penalty does not exist, the penalty itself cannot survive. Consequently, the ITAT directed the deletion of the penalty imposed under Section 271(1)(c).
Conclusion:
The ITAT’s decision to delete the penalty imposed on Green Valley Infracity Pvt. Ltd. underscores the principle that penalties cannot be sustained if the basis for such penalties is found to be invalid. In this case, the quashing of the CIT(A)’s enhancement order by the Tribunal led to the logical conclusion that the penalty under Section 271(1)(c) was also unsustainable.
Final Judgment:
The appeal filed by Green Valley Infracity Pvt. Ltd., Noida, against the penalty imposed by the CIT(A) for AY 2012-13 is allowed. The penalty under Section 271(1)(c) is deleted.
Order Pronounced: 8th June 2021
Judge: Shri Anil Chaturvedi, Accountant Member
Reference: INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH ‘SMC-1’, NEW DELHI
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