TMI Blog2022 (8) TMI 1277X X X X Extracts X X X X X X X X Extracts X X X X ..... Subbaraya Aiyar in both the appeals COMMON JUDGMENT R. MAHADEVAN, J. Challenging the order of the Tribunal dated 03.12.2010 relating to the assessment years 1999-2000 and 2001-02, these Tax Case Appeals have been filed by the appellant/Revenue. 2.By order dated 28.09.2011, this Court admitted these Tax Case Appeals on the following substantial questions of law: TCA.No.440 of 2011: 1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in cancelling the penalty of Rs.7,87,50,000/- levied under section 271(1)(c) of the Income Tax Act, 1961, even though the assessee had made a false claim of depreciation on the sale and lease back transactions relating to windmills electric generators, where the assessee itself was not the owner of lands on which the generators had been installed and hence could not be treated as owner of the windmills? 2. Whether on the facts and in the circumstances of the case the Income-Tax Appellate Tribunal was right in not holding that the penalty had been rightly levied since the assessee had made a false claim of depreciation on wind electric generators when the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the Assessing Officer, by an order dated 28.03.2006 concluded that the assessee had intentionally furnished inaccurate particulars of their income by making false claim and it attracts penal action under Section 271 (1) (c) of the Act. Thus, the Assessing Officer, after having held that the assessee had concealed the particulars of income to the extent of Rs.22,50,00,000/- within the meaning of Explanation I to Section 271(1)(c) and the explanation offered by the assessee was not satisfactory, levied the minimum penalty of Rs.7,87,50,000/- being 100% of the tax sought to be evaded. 4. The assessee/Bank had merged with ICICI Bank Limited with effect from 10.03.2001 as per the scheme of amalgamation under Section 44A of Banking Regulation Act, approved by the Reserve Bank of India. For the assessment year 2001-2002, the assessee filed their return of income on 29.10.2011 declaring a loss of Rs.27,12,68,138/- and the return was processed under Section 143 (1) of the Act on 29.11.2002. Subsequently, the case was selected for scrutiny and the assessment was completed under Section 143 (3) of the Act on 31.03.2004 determining the total income of the assessee at Rs.34,33,06,188/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned counsel appearing for the respondent/ assessee would submit that based on the available material, the Commissioner of Income Tax (Appeals) deleted the penalty levied by the Assessing Officer and the same was also affirmed by the Tribunal by the order impugned herein, which does not warrant any interference by this Court. 9. Heard the learned counsel appearing on either side and also perused the materials available on record. 10. It is seen that the penalty proceedings were initiated against the assessee under Section 27(1)(c) on the ground that the assessee made false claim of depreciation and deliberately furnished wrong particulars of income before the Assessing Officer. However, the appeals filed by the assessee before the Commissioner of Income Tax (Appeals), came to be allowed by deleting the penalty, with the following observations: I.T.A. No. 185/06-07/A.III I have considered the facts of the case and the submissions of the ld. AR. I have also gone through the order of Hon'ble ITAT, find that AO has levied penalty only in respect of disallowance of 50% of depreciation on windmills and 100% depreciation on windmills leased to Milton Plastics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olely on the basis of an addition of Rs. 4 lakhs to the assessee's total income and the addition was deleted by the Tribunal: Held, that it was evident from the material on record that the penalty had been imposed solely on the basis of the addition of Rs. 4 lakhs to the assessee's income. If the addition was deleted, the charge of concealment of income could not be sustained. Imposition of penalty under s.271(1)(c) of the IT Act, 1961, was, therefore, not valid. 4. CIT vs. Madanlal Sohanlal (1989) 176 I.T.R. 189 (Cal). Penalty cannot stand on its own independently of the assessment. Where, in an appeal against the assessment reopened under s.147 of the IT Act, 1961, the Tribunal deleted the addition on account of deemed dividend under section 12(1B) read with section 2(6A)(e) of the Indian Income-tax Act, 1922, the deemed dividend which had been deleted could not form the subject-matter of imposition of penalty under section 271(1)(c) of the Income-tax Act, 1961, because, the basis for imposition of penalty had ceased to exist. Therefore, the Tribunal was correct in cancelling the penalty imposed on account of the addition. 5. CIT vs. Bedi and Co. (P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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