DCIT CIRCLE 42(1)(1), MUMBAI, MUMBAI vs. MANSUKH ARJANBHAI SUREJA, BORIVALI(W), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “D”, MUMBAI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER And SHRI RAKESH KUMAR LODHA, ACCOUNTANT MEMBER ITA No.6387/MUM/2026 Assessment Year: 2012-2013 DCIT CIRCLE 42(1)(1) MANSUKH ARJANBHAI SUREJA Room No.732, 7th Floor, A 401 Sunderdham off SV Kautilya Bhavan BKC, Vs. Road, Rambaug Lane, Bandhra (E), Borivali West, Mumbai – 400051 Mumbai – 400 092 Maharashtra Maharashtra PAN- AABPS6775P (Appellant) (Respondent) Assessee Represented by : Ms. Shivani Shah Revenue Represented by : Ms. Pooja Garbiyal SR DR Date of Hearing : 15.09.2026 Date of Pronouncement : 18.09.2026 O R D E R PER : Shri Rakesh Kumar Lodha, Accountant Member: This appeal has been preferred by the Revenue against the order dated 23.03.2026 passed by the Learned Commissioner of Income Tax (Appeals) [“Ld. CIT(A)”] under section 250 of the

ITA NO. 6387-MUM-2026 MANSUKH ARJANBHAI SUREJA AY- 2012-2013 Income-tax Act, 1961 (“the Act”) for the Asstt Year 2012-13, arising out of the penalty order dated 17.03.2025 passed under section 271(1)(c) of the Act. 2. The Revenue has raised the following grounds before the Tribunal: 1. “On the facts and circumstances of the case and in law, the Ld. CIT(A) is erred in deleting penalty of Rs. 1,31,55,193/- u/s 271(1)(c) of the Income Tax Act levied by the AO.” 2. “On the facts and circumstances of the case and in law, the Ld. CIT(A) is erred in deleting the penalty u/s 271(1)(c) of the Income Tax Act relying on the decision of the Hon‟ble ITAT „E‟ Bench on the quantum issue ignoring the fact that the quantum addition was made on the basis of search and post search investigation wherein it was established that the alleged transactions were nothing but accommodation entries and the said decision of Hon‟ble ITAT „E‟ Bench was further challenged by the Revenue in Hon‟ble High Court and is still pending.” 3. “The appellant craves leave to amend or alter or add a new ground which may be necessary.”

ITA NO. 6387-MUM-2026 MANSUKH ARJANBHAI SUREJA AY- 2012-2013 and Telecom Services Limited is a penny stock scrip company and used to facilitate introduction of unaccounted income of the members in the form of exempt long-term capital gain. Therefore, the Assessing Officer passed the reassessment order, making an addition of Rs.4,30,66,774 under Section 69C of the Act by rejection of exemption u/s 10(38) of the Act. The Income Tax Appellate Tribunal (in short “ITAT”) “D Bench”, Mumbai, has quashed the assessment order, in case, bearing ITA No.4348 & 4347/mum/2023 on 23rd August 2024. 4. Before us, the learned authorized representative of the assessee submitted that the penalty under Section 271(1)(c) has been levied on account of the additions under section 69C of the Act, on account of rejection of claim of exemption under section 10(38) of the Act. Later on, the Learned Commissioner of Income Tax (Appeals), in the light of the above stated decision of the ITAT, deleted the penalty levied under Section 271(1)(c) of the Act Rs.1,31,55,193/-. 5. The learned AR further emphasized that very basis for levy of penalty qua addition u/s 69C made in assessment order has already been quashed by the Honorable Income Tax Appellate Tribunal, Mumbai Bench, resultantly, the additions not remained there.

ITA NO. 6387-MUM-2026 MANSUKH ARJANBHAI SUREJA AY- 2012-2013 6. Further stated that, the revenue is in appeal before the Hon'ble High Court against the order of the Tribunal, and presently, neither stay granted on the order nor reversed. Therefore, the penalty itself becomes unsustainable in law for that quashed assessment order. In support of the contention, the assessee placed reliance on the judgments: (i) K.C. Builders v. ACIT 135 Taxman 461 (SC), (ii) RBJ InfraTech Private Limited v. ITO [ITA No. 9530/DEL/2019, ITAT Delhi] 7. Per contra, the learned DR appearing for the revenue asserts that the quantum additions forming the basis of the penalty deleted by the Honorable ITAT, have been challenged before the Honorable High Court and pending there. 8. The penalty has been levied for the quantum additions based on the search and post-search investigation upon the other person. 9. We have considered the rival submission, perused the material available on record, and observed that additions under Section 69C of the Act made by rejection of claim of exemption u/s 10(38) of the Act in the assessment order under Section 147 of the Act. The ITAT, Mumbai Bench in case, ITA No. 4348 and 4347/MUM/2023, dated 23rd August 2024, relied upon judgment of

ITA NO. 6387-MUM-2026 MANSUKH ARJANBHAI SUREJA AY- 2012-2013 Hon’ble Jurisdictional High Court, Mumbai, in case of South Yarra Holdings vs ITO, in W.P. No. 3998 of 2018, has quashed the assessment order itself, so, presently, there is no addition remained against assessee. The Hon’ble Apex Court in the case of K.C. Builders v. ACIT 135 Taxman 61(SC) held at para 14 that: 1. Where the addition made in the assessment order, on the basis of which penalty for concealment was levied, is deleted; there remains no basis at all for levying the penalty for concealment. Therefore, in such a case, no such penalty can survive, and the same is liable to be canceled, as in the instant case. 10. We respectfully following the judgment of the Hon’ble Supreme Court, and quashed the assessment order, the penalty levied under section 271(1)(c) of the Act cannot survive. Accordingly, penalty of Rs.1,31,55,193/- is hereby cancelled. 11. In the result, appeal of the revenue is dismissed.

Order pronounced in the open court on 18.09.2026.

Sd/- Sd/- (CHALLA NAGENDRA PRASAD) (RAKESH KUMAR LODHA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated: 18.09.2026. Sharath, Private Secretary.

ITA NO. 6387-MUM-2026 MANSUKH ARJANBHAI SUREJA AY- 2012-2013 Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench

//True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.