Saipem Triune Engineering Pvt. Ltd.,, ... vs Assessee

This appeal by the assessee is directed against the order passed by

the CIT(A) on 12.2.2013 directly imposing penalty u/s 271(1)(c) of the ITA No.2113/Del/2013 Income-tax Act, 1961 (hereinafter also called 'the Act') in relation to the

assessment year 2007-08.

2. We have heard the rival submissions and perused the relevant

material on record. Briefly stated, the facts of the case are that the

assessment in this case was completed u/s 143(3) of the Act. The ld.

CIT(A) made four enhancements viz., a sum of Rs.3044.06 lac on

account of applicability of section 40A(2); a sum of Rs.16.86 lac on

account of depreciation; a sum of Rs.51.47 lac again on account of

depreciation on fixed assets; and a sum of Rs.55.79 lac on account of

rent for use of assets. Pursuant to such enhancements, the ld. CIT(A)

imposed penalty u/s 271(1)(c) of the Act vide his order dated 12.2.2013

in respect of total enhancements made by him to the tune of Rs.3168.20

lac. Such amount of penalty was determined at Rs.10,76,87,140/-,

being 100% of the amount of tax sought to be evaded. The assessee

preferred appeal before the Tribunal against the order passed by the ld.

CIT(A) in quantum proceedings. The first enhancement of Rs.3,044.06

lac came to be deleted by the tribunal vide its order dated 25.7.2014 in

2 ITA No.2113/Del/2013 ITA No.5239/Del/2012, a copy of which is available on record.

Relevant discussion has been made on page 62 of the Tribunal order. In

so far as the remaining three enhancements are concerned, the Tribunal

restored the matter to the file of AO for fresh adjudication.

3. The nutshell of the matter is that the Tribunal has deleted first

enhancement made by the ld. CIT(A) and restored the issues in respect

of remaining three enhancements to the AO for a fresh consideration. In

such circumstances, there can be no question of sustaining any penalty,

at this stage, on the enhancements so made. There can be no penalty on

the amount of enhancement deleted by the tribunal. On the

enhancements restored to the AO, the question of penalty can be

examined only by the AO pursuant to the making of fresh assessment.

The impugned order is set aside and the instant penalty on such restored

issues is sent back to the AO for taking an appropriate decision after the

finalization of the fresh assessment pursuant to the tribunal order. Our

view in restoring the penalty to the AO is fortified by the judgment of

the Hon'ble Supreme Court in the case of Mohd. Mohatram Farooqui

3 ITA No.2113/Del/2013

vs. CIT (SC) 2010-TIOL-23-SC-IT in which it has been held that if

addition is restored to the AO, then penalty should also be restored. The

Hon'ble jurisdictional High Court in Sanjay Gupta vs. CIT (2014) 366

ITR 18 (Del) has also held that where the quantum has been remanded to

the AO, the question of penalty on account of the said amount being

treated as undisclosed income, should also be remanded to the AO. We,

therefore, set aside the impugned order and remit the matter to the file of

the AO for determining the question of penalty or otherwise, after the

passing of the order pursuant to the restoration made by the Tribunal on

the three enhancements.

4. In the result, the appeal is partly allowed.

The order pronounced in the open court on 08.04.2015.

Sd/- Sd/-

[C.M. GARG] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated, 08th April, 2015. dk

4 ITA No.2113/Del/2013

Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT

AR, ITAT, NEW DELHI.

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