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Acit, Central Circle-13, New Delhi Room No. 332, Ara Centre, Jhandewalan Extn., New Delhi Vs. M/s Elel Hotels And Investments Ltd.9th Floor, Hotel Sea Rock, Band Stand, Bandra (W), Mumbai
August, 27th 2015
                                                         ITA NO.5063/Del/2013

                     DELHI BENCH "B", NEW DELHI
                    I.T.A. No. 5063/DEL/2013
                           A.Y. : 2007-08
DELHI                               VS. INVESTMENTS LTD.,
ROOM NO. 332, ARA CENTRE,                 9TH FLOOR, HOTEL SEA
JHANDEWALAN EXTN.,                        ROCK,
NEW DELHI                                 BAND STAND, BANDRA (W),
(APPELLANT)                                   (RESPONDENT)

        Department by                :     Md. Mohsin Alam, CIT(DR)
         Assessee by                 :    Sh. Ajay Wadhwa, CA, Ms. Aruna,

                     Date of Hearing : 20-08-2015
                     Date of Order       : 26-08-2015

     Revenue has filed this appeal against the Order dated 3.6.2013

passed by the Ld. Commissioner of Income Tax (Appeals)-I), New

Delhi pertaining to assessment year 2007-08.

2.   The grounds raised by the Department read as under:-

          "1.    The order of the Ld. CIT(A) is not correct in law and

          2.     On the facts and in the circumstances of the case,
                 the Ld. CIT(A) has erred in law in deleting the

                                                      ITA NO.5063/Del/2013

                  penalty   u/s.     271(1)(c)   amounting     to     Rs.
                  2,01,67,817/- imposed by AO.

           3.     The appellant craves leave to add, amend any / all
                  the grounds of appeal before or during the course of
                  hearing of the appeal.

3.    The brief    facts of the    case are that the return was filed

declaring a loss of Rs. 5,58,61,376/-.           The assessment was

completed u/s. 143(3) of the Income Tax Act, 1961 on 31.12.2008

assessing the total income         at Rs. 71,76,39,240/- after making

certain additions and disallowances. In appeal, two of the additions /

disallowances were sustained by the Ld. CIT(A) in his order dated

11.5.2010. He directed that instead of addition of Rs. 51,28,50,000/-

u/s. 69C, an addition of Rs. 4,96,68,535/- be made u/s. 2(24). He

further upheld the addition on account of scrap sales amounting to

Rs. 25 crores to the extent of Rs. 1,02,47,738/-. The AO initiated

penalty proceedings u/s. 271 r.w.s. 274 of the Income Tax Act, 1961

during the assessment proceedings u/s. 143(3), and finally imposed

a penalty of Rs. 2,01,67,817/- u/s. 271(1)(c) on the amounts upheld

in appeal vide order dated 16.3.2011.

4.    Aggrieved with the penalty order, assessee appealed before

the Ld. CIT(A), who vide impugned order dated 03.6.2013 deleted

the penalty in dispute by allowing the appeal filed by the assessee.

                                                      ITA NO.5063/Del/2013

5.   Now aggrieved with the      impugned order, Revenue filed the

present Appeal before the Tribunal.

6.   At the time of hearing, Ld. DR relied upon the order of the AO

and reiterated the contention raised by the Revenue in the grounds

of appeal.

7.   On the contrary, Ld. Counsel of the assessee relied upon the

order passed by the Ld. First Appellate Authority and stated that      in

this case since the quantum deleted/ set aside by the ITAT and

therefore, penalty does not survive. He further submitted that Ld.

CIT(A) has correctly appreciated the legal position by deleting the

penalty following the order of the ITAT dated 17.5.2012 on quantum

additions.   He further stated that     the Department has filed a

frivolous appeal against the order of the Ld. CIT(A) knowing well that

quantum has already been decided by the ITAT. He placed reliance

upon the decision of the ITAT in the case of ACIT vs. RPG Credit &

Capital Ltd. wherein the   strictures have been passed against the

Department for filing frivolous appeal. He also filed the copy of the

letter written by the Member, CBDT directing the Commissioners of

Income Tax not to file frivolous appeals. In view of the above, he

requested that the impugned order of the Ld. CIT(A) may be upheld

by dismissing the appeal filed by the Revenue.

                                                      ITA NO.5063/Del/2013

8.    We have heard both the parties and perused the relevant

records available with us, especially the orders passed by the

Revenue Authority. We are of the considered that the Ld. CIT(A) has

deleted the penalty in dispute by thoroughly examining the

assessment order, penalty order, submission filed by the assessee

and the order of the ITAT, Delhi dated 17.5.2012 in ITA No.

3148/Del/2010 filed by the assessee and cross      appeal filed by the

Revenue in ITA No. 3477/Del/2010. We find that the addition of Rs.

4,96,68,535/- directed to be made u/s. 2(24) by the Ld. CIT(A) was

deleted vide para no. 78. We also find that as the quantum addition

has been deleted, the penalty relating thereto does not survive and

was rightly deleted, which does not need any interference on our

part, hence, we uphold the decision of the Ld. CIT(A) on this issue.

8.1    As regards the addition of Rs. 1,02,47,738/-, we find that the

ITAT has vide aforesaid order dated 17.5.2012 vide para 110 of the

order restored the matter to the AO with the direction to decide the

same after giving the assessee a reasonable opportunity of hearing

in this regard.   We note that as the quantum addition has been

restored to the AO for fresh decision, the penalty imposed relating

thereto was rightly cancelled by the Ld. CIT(A).

8.2   In the background of the aforesaid discussions and in view of

the facts and circumstances of the case, we are of the considered

                                                          ITA NO.5063/Del/2013

opinion that in the present case, the penalty under section 271(l)(c)

is not leviable and it deserves to be deleted, hence, Ld. CIT(A) has

rightly   deleted   the   penalty   made by     the   Assessing Officer.

Therefore, we do not see any reason to interfere with the order of

the Ld. CIT(A), accordingly, we uphold the same           and decide the

issue against the Revenue by dismissing the Appeal filed by the


9.    In the result, the appeal filed by the Revenue stands

      Order pronounced in the Open Court on 26/08/2015.

      Sd/-                                                       Sd/-
[T.S. KAPOOR]                                              [H.S. SIDHU]
ACCOUNTANT MEMBER                                      JUDICIAL MEMBER

Date 26/8/2015
Copy forwarded to: -
1.    Appellant -
2.    Respondent -
3.    CIT
4.    CIT (A)
5.    DR, ITAT                      TRUE COPY
                                                      By Order,

                                                      Assistant Registrar,
                                                      ITAT, Delhi Benches

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