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Sec. 271 of Income Tax Act, 1961—Penalty—Once, addition on which penalty levied u/s 271(1)(c) has been finally deleted by the appellate authorities, then there is nothing survives to levy penalty u/s 271(1)(c).
Facts: Whether CIT(A) erred in deleting penalty levied u/s. 271(1 )(c) on account of disallowance of promotion expenses and Whether CIT(A) erred in deleting penalty levied u/s. 271(1)(c) solely on ground that quantum addition has been deleted by IT AT ignoring the fact that the decision on quantum decision has not been accepted by the Department and appeal u/s. 260A has been filed before the Hon'ble Bombay High Court?
Held, that it was found ITAT has deleted additions made by AO towards sales promotion expense, in light of the circular issued by the CBDT, on the basis of MCI regulations. We further noted that ITAT, Mumbai ‘G’ bench has also deleted additions made towards sales promotion expenses being freebies given to doctors on the basis of circular No.05/2012 dated 01/08/2012 issued by the CBDT. Once, addition on which penalty levied u/s 271(1)(c) has been finally deleted by the appellate authorities, then there is nothing survives to levy penalty u/s 271(1)(c). CIT(A) after considering relevant facts and also, by taken note of facts that the Tribunal has deleted additions made by AO, which triggered levy of penalty of u/s 271(1)(c) has deleted penalty levied on such additions, We, therefore are of the considered view that CIT(A) was right in deleting penalty levied by AO u/s 271(1)(c) and hence, we are inclined to uphold the order of CIT(A) and dismiss, appeal filed by the revenue for both Assessment Years. - DEPUTY CIT V/s GALDERMA INDIA PVT. LTD. - [2020] 80 ITR (TRIB) 452 (ITAT-MUMBAI)