The case involves the Assistant Commissioner of Income Tax, Circle-27(1), New Delhi, as the appellant, against M/s UK Paints India Pvt. Ltd., based in New Delhi. This appeal was for the assessment year 2011-12, primarily focused on a significant penalty levied under section 271(1)(c) of the Income Tax Act, which was subsequently deleted by the CIT(A).
The appeal was filed in response to the CIT(A)’s decision to delete a penalty amounting to Rs. 81,03,423 for discrepancies in income disclosure, which the CIT(A) deemed improperly applied by the AO. The main contention from the revenue’s side was the appropriateness of the penalty concerning the marking of correct limbs in the notice and the reassessment of the quantum by the CIT(A) despite upholding the addition’s merit.
During the tribunal hearings, both parties presented their arguments. The tribunal reviewed the case’s facts and the quantum appeal’s outcomes, noting that the quantum addition, which formed the penalty’s basis, had been deleted in a previous order. Consequently, without the quantum addition, the basis for the penalty ceased to exist, leading to the deletion of the penalty by the tribunal.
This case highlights the importance of procedural correctness in tax assessments and the implications of appellate tribunal decisions on penalty levies. The outcome not only supported the respondent’s position but also emphasized the necessity for clear and lawful application of tax laws by the authorities.
Order pronounced in open court on August 17, 2023.
Detailed Review of ITA 835/DEL/2020: ACIT vs UK Paints India Pvt. Ltd – Penalty Deletion Case
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