ITAT deleted penalty as its Cordinate Bench had deleted the addition u/s 69C (of Income Tax Act, 1961)

1. Sh Pankaj R Gandhi had income from business being share of profit from the firm M/s. IMP Electronics.

2. Assessee did not attend the assessment proceedings .

3. AO found on local enquiries that assessee has sold his shop as well as the house.

4. Since assessment was getting time barred, AO completed quantum assessment ex-parte u/s 144 (of Income Tax Act, 1961).

5. AO made addition of Rs 12 lakhs for payment against credit card bills u/s 69C (of Income Tax Act, 1961) as source of expenditure could not be verified and the same was treated as unexplained expenditure.

6. CIT confirmed the addition.

7. ITAT deleted the addition.

8. AO initiated penalty proceedings u/s 271(1)(c) (of Income Tax Act, 1961) by issuing notice u/s 274 (of Income Tax Act, 1961).

9. AO levied penalty of Rs 5 lakhs.

10. CIT(A) confirmed penalty.

On appeal, the ITAT held as under:

11. The Mumbai Tribunal has in the appeal related to quantum assessment has held that addition of Rs.12,04,026/- being payments made for credit card bills is not sustainable u/s 69C (of Income Tax Act, 1961) while the Tribunal has directed to apply GP rate of 12%.

12. Since the quantum additions has already been deleted in the manner as stated above, the penalty levied u/s 271(1)(c) (of Income Tax Act, 1961) based on the same additions cannot be sustained and hence, we order deletion of the penalty of Rs.5,00,000/

Case Reference - Sh.Pankaj R. Gandhi Vs Income Tax Officer.

IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, MUMBAI

BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER

AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER

I.T.A. No.3235/Mum/2014

(Assessment Year: 2008-09)