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2023 (8) TMI 589 - AT - Income TaxPenalty u/s 271(1)(c) - disallowance of claim of Long Term Capital Gain as exempt u/s 10(38) treating it as business income of the assessee - HELD THAT:- We observe that the ITAT Ahmedabad in assessee’s own case has deleted the quantum additions in favour of the assessee. Accordingly, since the very basis/foundation on which penalty u/s 271(1)(c) of the Act had been levied on the assessee itself has been vacated, then the consequential penalty imposed u/s 271(1)(c) of the Act is also liable to be vacated. In the case of CIT v Shah Alloys [2012 (9) TMI 957 - GUJARAT HIGH COURT] held that penalty cannot be imposed when addition made, which was basis for penalty, was set aside. In the case of LRs Management [2023 (5) TMI 351 - ITAT RAJKOT] it was held that Where quantum addition made by AO was deleted by Tribunal, there remained no basis for levy of penalty under Section 271(1)(c) of the Act. In view of the facts of the instant case and the settled legal proposition on the subject that once the quantum proceedings itself have been decided in favour of the assessee, there is no scope of levy of penalty u/s 271(1)(c) - Decided in favour of assessee.
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