Where the additions and disallowances are deleted by the higher authorities, there is no basis for levying penalty u/s 271(1)(c) of the Act – ITAT Delhi

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Crux : Where the additions and disallowances are deleted by the higher authorities, there is no basis for levying penalty u/s 271(1)(c) of the Act.  

 

Case Details :  The ACIT vs Oriental Bank of Commerce.  

 ITA 5845/Del/2016  & ITA No. 5846/Del/2016 (Order dated 11.12.2019)

 

In Favour of –ASSESSEE

 

Facts of the Case – AY 2008-09 and 2009-10

 

  1. The Appeals are preferred by the Revenue challenging the order of the first appellant authority who deleted the penalty levied u/s 271(1)(c) of the Income-tax Act, 1961
  2. The addition/disallowance on which the Assessing Officer has proceeded to levy penalty u/s 271(1)(c) of the Act relates to the claim of deprecation on fall in value of investment and claim of depreciation on software.
  3. The quantum addition in respect of claim of depreciation on fall in value of investment has been deleted by the Tribunal and claim of expenditure on software has been allowed by the Hon’ble High Court of Delhi.
 Findings &Discussions:  

 

  1. In respect of the addition made for the claim of depreciation on fall in value of investment has been deleted considering the fact that the bank transferred the securities from “available for sale” category to “held to maturity” category which resulted in substantial amount of loss debited to the P&L A/c.
  2. For the purpose of claim of expenditure on software that has been allowed by the High Court of Delhi stating the mere circumstance that the depreciation rate is spelt out in the Schedule to the Income-tax Act in our opinion is not conclusive as to the nature of the expenditure and whether it resulted an enduring advantage to a particular assesse.
Conclusion:

 

Thus, from the foregoing, the Tribunal held that where the foundation has been removed, the super structure must fall i.e. where the additions or disallowances are not valid, the penalty notices issued are bad in law.

To download the complete order, click here ACIT vs Oriental Bank of Commerce

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