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Facts
The assessee company failed to file its return of income. Information revealed cash deposits in its bank account. The AO initiated assessment proceedings and subsequently penalty proceedings for non-compliance.
Held
The Tribunal held that since the quantum addition was deleted by a previous order due to the proprietor having declared the income, and given the confusion regarding PAN numbers and the ownership of the cash deposit, it was appropriate to set aside the penalty issues for denovo adjudication.
Key Issues
Whether the penalty for non-compliance during assessment and penalty proceedings is sustainable when the underlying addition was deleted and there is ambiguity regarding the PAN and ownership of the deposits?
Sections Cited
250, 142(1), 144A, 133(6), 144, 270A, 271B, 271AA, 272A, 272A(1)(d), 147, 144(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI OM PRAKASH KANT, AM
are identical, we hereby pass a consolidated order by taking as the lead case. 2. The assessee has raised the following grounds of appeal:
1. Considering the facts and circumstances of the case and in Law, the National Faceless Appeal Centre (NFAC) has erred in confirming the Penalty Order under section 272A(1)(d)
& ors. M/s. Bombay Tyres dated 22nd August, 2025 passed by the Assessing Officer in arbitrary and unjust manner without appreciating the merits of the case.
Considering the facts and circumstances of the case and in Law, the NFAC erred in confirming the impugned penalty order passed by the Assessing officer in gross violation of the principles of natural justice.
3. Considering the facts and circumstances of the case and in Law, the NFAC has erred in confirming the penalty of Rs.10,000/- levied by the Assessing Officer under section 272A(1)(d) of the Act when the addition made in the quantum proceedings are erroneous and not sustainable in Law.
4. Considering the facts and circumstances of the case and in Law, the NFAC has erred in confirming the penalty in respect of PAN AAGCB1604E which pertains to a non-existent / unincorporated entity. Therefore, any proceedings against non-existent entity are void ab initio and without jurisdiction and therefore the penalty proceeding are void and liable to be quashed.
The Appellant craves leave to add to, alter, amend, vary, omit, substitute or modify the Grounds of Appeal as and when advised.”
The brief facts of the case are that the assessee company did not file its return of income for the year under consideration. Based on the information available in AIMS module it was found that the assessee had deposited cash amounting to Rs.3,18,43,590/- in its bank account maintained with Federal Bank, Vashi branch, bearing account No.13690200027434. The Learned Assessing Officer (“Ld. AO” for short) issued notice u/s. 142(1) of the Act dated 30.01.2018 which was duly served upon the assessee. In response to the same, the assessee did not file its return of income. Subsequently, directions were given u/s. 144A of the Act and notice u/s. 133(6) of the Act were issued to the Branch Manager, Federal Bank seeking for complete bank statement of the assessee.
Upon perusal of the same, the Ld. AO observed that total cash credit reflecting in the bank statement was amounting to Rs.7,14,06,056/- in which cash deposit of Rs.3,18,43,590/- was made. The assessee in spite of several opportunities made no compliance before the & ors. M/s. Bombay Tyres Ld. AO and hence assessment order dated 28.06.2019 was passed u/s. 144 r.w.s. 144A of the Act being best judgment assessment where the Ld. AO determined total income at Rs.3,50,08,587/- after making an addition on cash deposit amounting to Rs.3,18,43,590/- and 8% on the total credits amounting to Rs.31,64,997/- out of the total credits amounting to Rs.3,95,62,466/- was made by the Ld. AO. The Ld. AO also initiated penalty proceedings u/s. 270A, 271B, 271AA & 272A of the Act. The Ld. AO passed the penalty order u/s. 272A(1)(d) of the Act vide order dated 19.03.2025 on the ground that the assessee was non-complaint during the penalty proceedings.
Aggrieved, the assessee was in appeal before the first appellate authority, which upheld the penalty levied by the Ld. AO on the ground that the assessee has willfully defaulted before the lower authorities.
The assessee, aggrieved by the same, is in appeal before us challenging the order of the Ld. CIT(A).
The Learned Authorized Representative (“Ld. A.R.” for short) for the assessee contended that in the quantum appeal the Tribunal in vide order dated 29.10.2025 deleted the impugned addition on the ground that there were two PAN numbers out of which, one is in the name of the company i.e. the assessee and another one in the name of the proprietor Shri Rohit Rajgopal Soman who is said to have been assessed by the Department u/s. 147 r.w.s. 144(3) of the Act vide order dated 19.04.2023 holding that the same has been duly accounted and reported by the proprietor. The Ld. A.R.
& ors. M/s. Bombay Tyres reiterated that the said cash deposit has been declared by the proprietor as his income. The Ld. A.R. contended that since the assessee has not complied with the proceeding before the lower authorities it may be given one more opportunity to present its case before the Ld. AO.
On the other hand, the Learned Departmental Representative (“Ld. D.R.” for short) for the Revenue, controverted the said fact and stated that the assessee has been non- compliant throughout the proceedings before the lower authorities and prayed that the LD. AO may verify the fact that the proprietor of the assessee company has already declared the cash deposit as his income in his return of income along with other factual aspects. The Ld. D.R. relied on the order of the lower authorities.
We have heard the rival submissions and perused the materials available on record.
The only moot issue that requires adjudication is “whether the assessee is liable to the penalty levied by the Ld. AO for non-compliance during the assessment proceeding and at the time of penalty proceedings as well?” It is observed that the Tribunal has deleted the quantum addition made in the hands of the assessee stating that the proprietor of the assessee company has already declared the same as his income and that he was already assessed on this issued by the Department. It is also noted that there were two PAN numbers out of which one is pertaining to the assessee company and the other is to be the proprietor’s and the bank account in which the cash was deposited is said to have been attached with the PAN number of the assessee company. When this fact was confronted to the Ld. A.R. during the appellate proceedings it was replied by the Ld. A.R. that the & ors. M/s. Bombay Tyres assessee was unaware of the fact as to how the company’s PAN was linked to the bank account. Further, it is also not brought to our knowledge as to whether the proprietor has declared the impugned cash deposit as his income in his returns and further the said deposit whether belongs to the assessee company or the proprietor requires further introspection and enquiry into the said issue. As the assessee has been non-compliant during the assessment proceedings as well as during the penalty proceedings, details relating to the same were not furnished to the Ld. AO. In all fairness to extend the assessee with one more opportunity to present its case before the Ld. AO, we deem it fit to set aside all the penalty issues in the abovementioned appeals to the file of the Ld. AO for denovo adjudication into the issue. We direct the assessee to strictly comply with the proceedings before the Ld. AO and to furnish all the relevant documentary evidences in support of its claim and the Ld. AO is also directed to decide the issue on the merits and in accordance with law on the basis of the submission of the assessee along with documentary evidences, if any.
In the result, the appeal filed by the assessee is hereby allowed for statistical purposes.
The finding given in this appeal i.e. will apply mutatis mutandis to other appeals i.e. 6607 & 6609/Mum/2025 as well.
& ors. M/s. Bombay Tyres Accordingly, all the appeals filed by the assessee are hereby allowed for statistical purposes.
Order pronounced in the open court on 24.12.2025