Penalty U/s 271(1)(c)

Querist : Anonymous (Querist) 22 April 2011 This query is : Resolved
The assessment of my client was completed u/s 147/143(3) on 30.12.2007. The assessment reopened only on the basis of valuation report of DVO. The assesee challenged this order before the CIT(A). The CIT(A) has allowed the appeal of the assessee and quashed the proceedings u/s 148 and also deleted the additions made on the basis of DVO's report. The department went in second appeal before ITAT. The department raised only one issue regarding validity of proceedings u/ 148. The A.O. has not raised any ground on the additions which were deleted by the CIT(A). The ITAT decided the appeal of the A.O. in his favount and hold that the proceedings u/s 148 are valid but didn't comment on the merits i.e. the additions because of that the A.O. has not raised any ground on merits. Now the A.O. levied the penalty u/s 271(1)(c) on the basis of the assessment order dated 31.12.2007. In fact all the additions were deleted by the CIT(A) and the same were not challenged before the CIT(A). My query is regarding the levy of penalty u/s 271(1)(c). Whether the penalty is leviable where all the additions were deleted by the CIT(A) and to this extent the order of CIT(A) is sustained even the proceedings u/s 148 declared valid by the ITAT ?
Is there any case law please let me know. From Shafi Mohammad Chouhan. Advocate

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Srajadvo460 (Expert) 22 April 2011
Sir the appeal filed by AO was allowed by setting aside the order of the CIT(A) and upholding the order of the AO as valid hence the findings of CIT(A) also goes. If the ITAT has passed a non-speaking order then you can raise it in the appeal. Further the penalty u/s. 271(1)(c) can be imposed by the Joint Commissioner only.

soumitra basu (Expert) 07 May 2011
I beg to differ. If the CIT (A) deleted the addition and the Revenue did not challenge the same before the ITAT, the deletion of the addition remain valid. Though the initiation of proceeding held valid by the ITAT but no comment regarding so called additions made by the AO and deleted by the CIT(A), it seems that the order of the CIT(A) is valid. The penalty is for tax sought to be evaded. It could be argue in the appeal that since there is no tax sought to be evaded, the question of penalty does not arise at all.

R.Ramachandran (Expert) 07 May 2011
Unless the full text of the Order of the CIT (A) and the Order of the ITAT are seen, we will only be indulging in guess work. Needless to say, such guess work will not make the querist any wiser.

Penalty U/s 271(1)(c)

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