IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 01.12.2009 Coram : THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIAN and THE HONOURABLE MR.JUSTICE M.M.SUNDRESH Tax Case (Appeal)No.2174 of 2006 Commissioner of Income Tax Chennai Appellant/Respondent v. M/s Chakiat Agencies P Ltd 40, Rajaji Salai Chennai 1. Respondent/Appellant Tax Case Appeal filed under section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras 'A' Bench, Chennai, dated 30.11.2005 passed in ITA No.1185/Mds/2002. Against the order of the Commissioner of Income Tax (Appeals)-III, Chennai-34 dated 20.4.02 in ITA No.Tr.476/2001- 02/A.III against the order of the Joint commissioner of Income Tax Special Range IV, Chennai-34 dated 28.4.2000 in GIR No.62-C/96-97. For appellant : Mr.J.Naresh Kumar For Respondent:Mr.Subbaraya Aiyar JUDGMENT (Judgment of the Court was delivered by K.RAVIRAJA PANDIAN, J.) The correctness of the order of the Tribunal dated 30th November 2005 made in I.T.A.No.1185/Mds/2002 relating to the assessment year 1996-97 wherein and whereby the penalty levied by the assessing officer under Section 271 (1)(c) of the Income Tax Act and upheld by the Commissioner of Income Tax (Appeals) has been directed to be deleted by the Tribunal on the premise that the Tribunal by its order dated 30.04.2003 made in I.T.A.No.57 of 2000 allowed the quantum appeal of the assessee. 2. Facts: The assessee is a shipping agent. For the assessment year 1996-97, the assessee had claimed deduction under Section 80-0 of the Income Tax Act on the ground that the assessee rendered service to foreign shipping company and also do certain technical services like booking of cargos and gathering and supplying the details of Market condition to foreign shipping companies. The Assessing Officer found that there was no actual receipt of foreign exchange by the assessee and thus levied https://hcservices.ecourts.gov.in/hcservices/ penalty under Section 271(1)(c) in a sum of Rs.30,30,430/-. The assessee filed an appeal before the Commissioner of Income Tax (Appeals) who upheld the order of the Assessing Officer. On further appeal, the Income Tax Appellate Tribunal decided the issue in favour of the assessee on the ground that when the assessee's claim of deduction u/s 80.0 had been allowed by the Tribunal in its order dated 30.04.2003, in ITA.No.57/Mds/2000, the very basis for the levy of penalty has gone. The correctness of the same is now canvassed before this Court by framing the following question of law:- "Whether in the facts and circumstances of the case, the Tribunal was right in cancelling the penalty levied u/s 271(1)(c) when the assessee has not produced any evidence, convincing the services rendered to foreign principle fell within the section 80 O?" 3. The learned counsel for the revenue submitted that the revenue not accepting the order of the Tribunal dated 30.04.2003 granting the relief u/s 80.0 made in quantum appeal filed tax case appeal. When the tax case appeal was pending before this Court, the present appeal in respect of penalty is filed. The quantum tax case appeal has been decided by this Court in the case of Commissioner of Income Tax vs. Chakiat Agencies Pvt. Limited reported in [2009] 314 ITR 200, wherein the order of the Tribunal granting the relief in favour of the assessee has been upheld. 4. In view of the fact that the quantum appeal has been decided in favour of the assessee, virtually the basis for imposition and levy of penalty under Section 271(1)(c) is not available. When such is the position, the imposition of penalty is not in accordance with law. Hence the question of law is answered in affirmative and in favour of the assessee. The appeal is dismissed. Sd/- Asst. Registrar //true copy// Sub Asst.Registrar rg To 1. The Assistant Registrar, Income Tax Appellate Tribunal, Chennai 'A' Bench, Chennai. 2. The Commissioner of Income Tax (Appeals) III Chennai-34. https://hcservices.ecourts.gov.in/hcservices/ 3. The Joint Commissioner of Income Tax, Special Range-IV, Chennai-34. 4. The Commissioner of Income Tax, Chennai. T.C.(A)No.2174 of 2006 BV {CO} TP/16.12.2009. https://hcservices.ecourts.gov.in/hcservices/