2019 (7) TMI 1264 - ITAT DELHI

Penalty u/s 271(1)(c) - quantum addition deleted related to difference of opinion between the assessee and the AO regarding valuation of stock - disallowance u/s 14A - HELD THAT:- Since the quantum addition already stands deleted, the penalty levied u/s 271(1)(c) has no legs to stand. In coming to this conclusion, we are guided by the decision of Hon’ble Supreme Court in the case of K.C.Builders vs ACIT [2004 (1) TMI 7 - SUPREME COURT] as held that “where the additions made in the assessment order, on the basis of which penalty for concealment was levied, are deleted there remains no basis at all for levying the penalty for concealment, and therefore, in such a case no such penalty can survive and the same is liable to be cancelled.” Therefore, the penalty levied u/s 271(1)(c) in respect of the aforesaid addition is held to be untenable and the order of the CIT(A) on this issue is upheld.

Penalty levied in respect of addition u/s 14A r.w. Rule 8D - DR has not disputed the facts, submissions and contentions contained in the aforesaid synopsis filed from the assessee’s side during the appellate proceedings in ITAT. In the facts and circumstances of this case, therefore, and having regard to the synopsis filed from assessee’s side, we reject the contention of the Ld.DR that every addition made in assessment order should invariably lead to penalty u/s 271(1)(c).

For this purpose, we take guidance from the order of the Hon’ble Supreme Court in the case of CIT vs Reliance Petro Products Pvt.ltd. [2010 (3) TMI 19 - SUPREME COURT] held that “a mere making of claim, which is not sustainable in law by itself, will not amount to furnishing inaccurate particulars regarding income of the assessee.” No interference from our side is warranted in the order of the Ld. CIT(A) deleting the penalty u/s 271(1)(c) in respect of the aforesaid addition u/s 14A r.w. Rule 8D. Accordingly, the order of Ld.CIT(A) on this issue is also upheld. - Decided in favour of assessee.