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Judgment
Bhavnesh Saini, J
1.This appeal by Revenue has been directed against the Order of the Ld. CIT(A)-7, New Delhi, Dated 20.01.2017, for the A.Y. 2004-2005, challenging the cancellation of penalty under section 271(1)(c) of the I.T. Act, 1961.
Briefly the facts of the case are that return of income was filed declaring income at Rs.5.85 crores. The assessment was completed under section 147/143(3) of the I.T. Act on 05.12.2011 at an assessed income of Rs.10.24 crores after addition of Rs.9.75 crores on account of short term capital gains and Rs.73,56,000/- on account of re-computation of rental value of property. Penalty proceedings were initiated under section 271(1)(c) of the I.T. Act on both the additions. The A.O. however noted that the Ld. CIT(A) has allowed the appeal of assessee with regard to short term capital gain, but, confirmed the second addition, on which, penalty was levied on the addition of Rs.73,56,000/-. The assessee challenged penalty order before Ld. CIT(A) and it was pleaded that against quantum addition assessee filed appeal before ITAT which have been allowed vide Order dated 15.09.2016 in ITA.No.2012/Del./2014 for A.Y. 2004-2005 in favour of the assessee. It was pleaded that since appeal of assessee have been allowed, therefore, penalty would not survive. The Ld. CIT(A), therefore, noted that since quantum addition of Rs.73,56,000/- which is the basis for levy of penalty have been deleted, no penalty is leviable. The Ld. CIT(A), accordingly, allowed the appeal of assessee.
After considering the submissions of the Ld. D.R. we do not find any merit in the departmental appeal. Since the quantum addition on which penalty was levied have been deleted by the ITAT, therefore, there is no basis for levy of penalty in the matter. There is no error in the order of the Ld. CIT(A) in cancelling the penalty. We, uphold his order and dismiss the departmental appeal.
In the result, appeal of the department dismissed.
Order pronounced in the open Court.