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Facts
The assessee's case was selected for reassessment under the 'Non Filer cases under RMS cycle' for AY 2016-17. Reassessment was completed under Section 147 r.w.s 144, making additions for Short Term Capital Gain and income from other sources. Penalty proceedings under Section 271(1)(c) were initiated.
Held
The Tribunal held that the imposition of penalty under Section 271(1)(c) was premature as the quantum appeal against the reassessment order was still pending before the CIT(A). The matter was remitted back to the AO to reconsider the imposition of penalty after the CIT(A) had adjudicated the quantum proceedings.
Key Issues
Whether penalty under Section 271(1)(c) imposed before the disposal of the quantum appeal against reassessment is sustainable.
Sections Cited
147, 144, 148A, 148, 271(1)(c), 249(4)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SMT. BEENA PILLAI & SHRI GIRISH AGRAWAL
Assessment Year: 2016-17 Sugrabahen Umer Bhorania vs Income Tax Officer, Ward 6th Floor, Flat 602, Murga Giran 20(3)(1), Mumbai CHS, Grant Road (E), Mumbai Piramal Chambers, Mumbai 400008 400012 PAN: (CDDPB8620D) Appellant Respondent Present for: Appellant by : Ms. Shruti Kalyanikar-Advocate Respondent by : Shri Arun Kanti Datta, CIT-DR Date of Hearing : 24.11.2025 Date of Pronouncement : 26.11.2025 O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of National Faceless Appeal Centre (NFAC), Delhi vide Order No. ITBA/NFAC/S/250/2025-26/1078510218(1) dated 15.07.2025 passed against the assessment order by Income Tax Officer Ward 20(3)(1), Mumbai u/s. 147 r.w.s 144 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 23.09.2024 for AY 2016-17.
Grounds taken by the assessee are reproduced as under: “1. On the facts and in the circumstances of the case and in law the Hon'ble CIT(A) erred in upholding penalty of Rs. 45,10,345/- u/s 271(1)(c) of the Act and the AY 2016-17 Sygrabahen Umer Bhorania reason assigned for doing so are wrong and contrary to the provision of Income Tax Act and rules made there under. 2. Your appellant craves leave to add to, amend alter or delete any of the above grounds of appeal
on or before the date of hearing.”
3. Brief facts are that case of the assessee was selected under “Non Filer cases under RMS cycle for AY 2016-17”. Case of the assessee was taken up by invoking provisions of 148A(b) by issuing notice dated 16.02.2023. Based on the material available on record, notice u/s. 148 for reopening of the assessment was issued against which assessee did not file the return nor submitted any reply. Reassessment was completed u/s. 147 r.w.s 144 by making an addition of Rs. 68,16,000/-, on account of sale consideration of property by taking cost of acquisition at NIL. This was treated as Short Term Capital Gain in the hands of the assessee. Another addition of Rs. 68,00,000/- was made under the head ‘income from other sources’ for which ld. AO presumed that assessee had received this amount on which TDS had been credited. Penalty proceedings u/s. 271(1)(c) where initiated on both the additions for concealment of particulars of income by the assessee. Assessee moved first appeal before the ld. CIT(A) on these additions which is pending for disposal by the said authority.
4. In the meanwhile, ld. AO proceeded with the penalty proceedings so initiated while completing the reassessment proceeding. He levied penalty of Rs. 45,10,345/- being minimum penalty at 100% of the at income-tax AY 2016-17 Sygrabahen Umer Bhorania sought to be evaded. Against this penalty imposition, assessee preferred first appeal before the ld. CIT(A). While adjudicating on the first appeal against the penalty order, ld. CIT(A) in paragraph 3.1 observed that in the matter of assessment, since total income of the assessee is assessed at Rs.1,36,16,000/-, assessee was suppose to pay advance tax. According to him, since assessee has not deposited the demand before filing of this appeal, she has violated the provisions of Section 249(4) resulting in the said appeal as not maintainable, for which assessee had mentioned “not applicable at Serial No. 9 of Form No. 35” and according to the ld. CIT(A), it is not correct. Thus, while concluding in paragraph 4, he dismissed the appeal as infructuous and not liable to be admitted as assessee had not filed the return of income as well as not paid an amount equal to the amount of advance tax which was payable.
We have heard both the parties and perused the orders of the authorities below. Admittedly, it is a fact on record that assessee had preferred an appeal before ld. CIT(A) against the reassessment order passed u/s. 147 r.w.s. 144 and is pending for adjudication. The impugned penalty order has been passed before the disposal of the quantum appeal by the ld. CIT(A). The issues on which addition has been made and the demand raised thereon are contested by the assessee are yet to be AY 2016-17 Sygrabahen Umer Bhorania adjudicated upon by the first appellate authority and, therefore, imposition of penalty u/s. 271(1)(c) is premature in terms of settled position of law on this aspect. Accordingly, in the given set of facts and circumstances, and taking into account the modus operandi of the faceless regime of appellate proceeding, we find it appropriate to remit this matter back to the file of ld. AO by setting aside, the impugned penalty order so as to reconsider imposition of penalty, once ld. CIT(A) had adjudicated upon the quantum proceedings against the reassessment passed u/s. 147 r.w.s.
Accordingly, ground raised by the assessee is allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 26.11.2025.