Al Vijay Owners Association v. Deputy Commissioner Of Income Tax .

Pramod Kumar, A.M.:— By way of this appeal, the assessee appellant has challenged correctness of the order dated 27th February, 2014, passed by the ld. CIT(A), confirming penalty u/s. 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2005-06.

2. Grievance raised by the assessee are as follows:

“(1) The Learned CIT(A) has erred in confirming the penalty levied on the additions sustained of Rs. 2,45,000/- under section 68 of the Income Tax Act. It is submitted that based on the facts and circumstances of the case the penalty u/s. 271(1)(c) cannot be levied. The penalty incorrectly sustained be deleted.

(2) Without prejudice to the above Ld. CIT(A) has erred in incorrectly holding that the assessee has furnished inaccurate particulars of income by introducing cash credits which were not properly explained and confirmed the penalty on the amount of Rs. 2,45,000/-.

(3) It is submitted that the penalty so confirmed be deleted.”

3. When this appeal was called out for hearing, learned counsel for the assessee invited our attention to the order dated 27.06.2014 whereby issue of related quantum addition was decided in favour of the assessee. In this view of the matter, according to the learned counsel, penalty must stand deleted.

4. Learned Departmental Representative did not have much to say but he placed his reliance on the orders of the authorities below.

5. In view of the fact that the issue of related quantum addition was decided in favour of the assessee, the very basis of the impugned penalty ceases to have any legally sustainable basis. Accordingly, penalty imposed must be deleted too. We, therefore, delete the impugned penalty.

6. In the result, appeal filed by the assessee is allowed.