ACIT Circle 18(2) Appeals Against Penalty Deletion for NTPC Vidyut Vyapar Nigam Ltd. – Assessment Year 2015-16

ACIT Circle 18(2) Appeals Against Penalty Deletion for NTPC Vidyut Vyapar Nigam Ltd. – Assessment Year 2015-16

Case Overview

Case Number: ITA 5744/DEL/2019

Appellant: ACIT, Circle-18(2), New Delhi

Respondent: NTPC Vidyut Vyapar Nigam Ltd., New Delhi

Assessment Year: 2015-16

Case Filed On: 2019-07-01

Order Type: Final Tribunal Order

Date of Order: 2023-05-31

Pronounced On: 2023-05-31

Introduction

The case between ACIT Circle-18(2), New Delhi, and NTPC Vidyut Vyapar Nigam Ltd., New Delhi, pertains to the appeal filed by the revenue department against the deletion of a penalty imposed under Section 271(1)(c) of the Income-Tax Act, 1961. The appeal was related to the assessment year 2015-16.

Background

The appellant, ACIT Circle-18(2), filed an appeal against NTPC Vidyut Vyapar Nigam Ltd., challenging the deletion of a penalty amounting to Rs. 37,30,24,001, which was imposed under Section 271(1)(c) of the Income-Tax Act. The penalty was originally imposed due to a disallowance made under Section 40(a)(ia) of the Act for non-deduction of tax at source.

Details of the Appeal

The main grounds of the appeal were:

• Whether the deletion of the penalty imposed under Section 271(1)(c) of the Income-Tax Act, 1961, by the learned Commissioner of Income-Tax (Appeals)-6, Delhi, was justified.
• The interpretation and application of the provisions of Section 40(a)(ia) and Section 271(1)(c) of the Income-Tax Act, 1961.

Arguments Presented

Appellant’s Arguments

The appellant argued that the penalty imposed under Section 271(1)(c) was justified as the respondent failed to deduct tax at source, leading to a disallowance under Section 40(a)(ia) of the Act. They contended that the deletion of the penalty by the learned Commissioner of Income-Tax (Appeals)-6 was incorrect.

Respondent’s Arguments

The respondent, NTPC Vidyut Vyapar Nigam Ltd., argued that the addition based on which the penalty was imposed had already been deleted by the Tribunal in the quantum appeal. They submitted that when the disallowance was no longer in existence, the penalty imposed on such disallowance could not survive. The respondent placed on record a copy of the Tribunal’s order dated 09.05.2022, which deleted the disallowance made under Section 40(a)(ia) of the Act.

Tribunal’s Findings

The Income Tax Appellate Tribunal (ITAT) Delhi Bench reviewed the case in detail. The tribunal considered the submissions and arguments from both parties, as well as the relevant provisions of the Income-Tax Act and previous case law.

Key Points from the Order

The tribunal’s order included the following key points:

• The Tribunal noted that the addition of Rs. 1,58,14,533 under Section 40(a)(ia) of the Act for alleged non-deduction of tax at source had been deleted in the quantum appeal.
• The Tribunal observed that since the disallowance was no longer in existence, the penalty imposed on such non-existent disallowance could not be sustained.
• The Tribunal upheld the decision of the learned Commissioner of Income-Tax (Appeals)-6, Delhi, in deleting the penalty imposed under Section 271(1)(c) of the Income-Tax Act, 1961.

Conclusion and Final Judgment

After thorough consideration, the tribunal ruled in favor of NTPC Vidyut Vyapar Nigam Ltd. The tribunal found that the deletion of the penalty by the learned Commissioner of Income-Tax (Appeals)-6, Delhi, was justified, as the basis for the penalty no longer existed. The appeal filed by ACIT Circle-18(2) was dismissed.

Order Pronouncement

The final order was pronounced in the open court on May 31, 2023, by the bench comprising Sh. N.K. Billaiya, Accountant Member, and Sh. Anubhav Sharma, Judicial Member.

Order: The appeal filed by the revenue is dismissed.

Members: [N.K. Billaiya] (Accountant Member) and [Anubhav Sharma] (Judicial Member)

Date of Pronouncement: 31/05/2023

Significance of the Ruling

This ruling is significant as it highlights the importance of the underlying basis for imposing penalties under the Income-Tax Act. It emphasizes that penalties cannot be sustained if the addition or disallowance on which the penalty is based is deleted. The decision provides clarity on the application of the provisions of Section 271(1)(c) and Section 40(a)(ia) of the Income-Tax Act, 1961.

ACIT Circle 18(2) Appeals Against Penalty Deletion for NTPC Vidyut Vyapar Nigam Ltd. – Assessment Year 2015-16