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DCIT Cen. Circle-15, New Delhi. Vs. Smt. Kusum Gupta, 21/40, Shakti Nagar, New Delhi-17.
September, 30th 2014
                  DELHI BENCH "D" NEW DELHI

                          ITA Nos. 5131, 5132 & 5133/Del/2013
                          Asstt. Yr: 2003-04, 04-05 & 2005-06
DCIT Cen. Circle-15,             Vs. Smt. Kusum Gupta,
New Delhi.                             21/40, Shakti Nagar, New Delhi-17.
                                       PAN: AEDPG 4771M

( Appellant )                         ( Respondent )

            Appellant  by       :     Smt. Sulekha Verma CIT(DR)
            Assessee by         :     Shri Salil Agarwal Adv. &
                                      Shri Shailesh Gupta CA

            Date of hearing     :     25-09-2014
            Date of order       :     29-09-2014.


      These appeals, preferred by the revenue, are directed against separate

orders dated 6-6-2013 passed by the       ld. CIT(A)-IV, New Delhi, deleting

penalties levied by the AO u/s 271(1)(c) of the I.T. Act, 1961, relating to

A.Yrs. 2003-04, 2004-05 & 2005-06.

2.    Brief facts of the case are that search & seizure operation u/s 132 was

carried out on 7-2-2007 at the residential/ business premises of the assessee. In

response to notice u/s 153A, the assessee filed her returns of income, which

were assessed as under:
                                                                 ITA 5131, 5132 & 5132/D/13

Assessment year               Income as         returned by Income as assessed by
                              assessee                      AO
2003-04                       3,73,830/-                    13,73,830/-
2004-05                       4,49,910/-                     80,49,910/-
2005-06                       4,60,240/-                     3,15,26,100/-

3.    The AO had initiated penalty proceedings u/s 271(1)(c) and                      levied

penalties as under:

      Asstt. Yr.                   Penalty levied
      2003-04                      Rs. 4,72,500/-
      2004-05                      Rs. 37,62,000/-
      2005-06                      Rs. 5,93,762/-

4.    In appeal, the ld. CIT(A) deleted the penalties for the assessment years

under consideration by holding as under:

     "4.3.    I have carefully considered the submissions of the ld. AR and perused
     the order passed by the AO. I find that Hon'ble ITAT vide para 13, 14 and 15
     of the order have allowed the appeal of the assessee for the AY 2003-04, 2004-
     05, 2--5-06 and 2006-07 and dismissed the appeal of the revenue for the AY
     2002-03, 2005-06 and 2006-07. For the sake of the convenience para 13, 14
     and 15 of the ITAT order are reproduced as under:

             "13.     In the appeals for the A Ys 2003-04, 2004-05, 2005-06 and
             2006-07 preferred by the assessee, the additions made in these A Ys in
             the assessment framed u/s 153 A have also been questioned on their
             merits. In the AY 2003-04 addition has been made u/s on account of
             non-genuineness of gift received at Rs.5,00,000/- each from Mr. Rahul
             Jain and Smt. Babita Jain by the minor son of the assessee. In A Y
             2004-05 addition 68 has again been made on account of non-
             genuineness of the gifts received of Rs. 69, 00, 000/- from Shri
             Goverdhan Dass and addition at Rs. 7,00,000/- has been made on
             account of ad-hoc disallowance of expenses. In A Y 2005-06 addition
             has been made at Rs. 17,64,000/- on account of education expenses of
             assessee's son. In AY 2006-07 in the appeal preferred by the revenue
             the action of Ld. CIT (A) has been questioned in directing the A O. to
                                                              ITA 5131, 5132 & 5132/D/13

        treat the income of sale of shares as one from long term capital gain;
        to treat the chargeability of income of Rs. 29, 09, 500/- at lower tax
        rate and in deleting the addition Rs. 3.39 crores made on account of
        unaccounted investment in the property. In the appeal preferred by the
        assessee for this year the action of the Ld. CIT(A) has been questioned
        whereby the Ld. CIT(A) has made disallowance of Rs. 1,00,000/- u/s
        14A of the Act and has sustained addition of Rs. 17,64,000/- made on
        account of estimate basis for education expenses of assessee's son.
        The revenue is also in appeal for the AY 2005-06 wherein they have
        questioned the action of Ld. CIT(A) whereby he has allowed
        exemption u/s10(38) amounting to Rs. 2,92,22,804/-. We however, find
        that fate of these appeals on the additions on its merits depends upon
        the outcome of the adjudication of the legal issue raised questioning
        the validity of addition/disallowance made by the A O. in the
        assessment framed u/s 153A of the Act in absence of any incriminating
        material recovered or statement recorded during the course of search,
        where original assessments were not abated.
         14. Similar argument as made in AY 2002-03 has been advanced by
        the parties on the validity of addition made in the assessment u/s 153A
        in these years. The Ld. AR asserted that in these years also there was
        no incriminating material recovered or statements recorded during
        the search suggesting the non-genuineness of the gifts or expenses
        claimed which was not remained the subject matter of the addition
        made in the original assessment which were not abated. He pointed
        out that except A Y 2004-05 in all the A Ys original assessment was
        framed u/s 143(3) of the Act, whereas in the A Y 2004-05 return filed
        was processed u/s 143(1) and no notice u/s 143(2) was issued within
        the prescribed time limit hence it reached finality.
         15. Since there is no change on this material fact that during all these
        assessment years no incriminating material was recovered or
        statement was recorded during the course of search suggesting non-
        genuineness of the claimed gifts or expenses etc. and no such
        addition/disallowance was made in the original assessment which
        remained unabated, we following the decision on the issue
        hereinabove in the appeal preferred by the revenue for A Y 2002-03,
        hold that such addition/disallowance cannot be made in the
        assessment framed u/s 153A of the Act in these A Ys. in appeals. In
        result the issue is decided in favour of the assessee and against the
        revenue. In view of this finding the remaining grounds questioning the
        merits of additions/disallowances do not need adjudication as they
        have become infructuous and academic only. Consequently appeals
        preferred by the assessee for the A Ys. 2003-04, 2004-05, 2005-06 and
        2006-07 are allowed and appeals preferred by the revenue in the A.ys.
        2002-03, 2005-06, 2006-07 are dismissed. "
Since, the Hon'ble ITAT has held that no addition/ disallowance can be made
in the assessment year under consideration u/s 153A of the Act, the addition
made by the AO stands deleted. Since the quantum addition itself does not
survive, the penalty order passed by the AO has no legs to sand. Respectfully
                                                                 ITA 5131, 5132 & 5132/D/13

     following the order of the Hon'ble Tribunal the penalty order passed by the AO
     is hereby cancelled.

5.    We have heard rival contentions and perused the material available on

record. Since the quantum additions for the assessment years in question have

been deleted by the ITAT, the very basis for levy of penalty u/s 271(1)(c) has

gone. Thus, we see no reason to interfere in the order of ld. CIT(A), deleting the

penalties in question.

6.    In the result, revenue's appeals are dismissed.

Order pronounced in open court on 29-09-2014.

       Sd/-                                              Sd/-
 ( A.T. VARKEY )                                  ( S.V. MEHROTRA )
JUDICIAL MEMBER                                   ACCOUNTANT MEMBER
Dated: 29-09-2014.
Copy to :
    1. Assessee
    2. AO
    3. CIT
    4. CIT(A)
    5. DR
    ITA 5131, 5132 & 5132/D/13
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