ANIL KUMAR SINGHAL,DELHI vs. ITO WARD 63(30), DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’: NEW DELHI BEFORE SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER ITA No.2551/DEL/2026 (Assessment Year: 2008-09) Anil Kumar Singhal, vs. ITO, Ward 63 (3), 1/7610, Street No. 8, Delhi. East Gorakh Park, Shahdara, Delhi - 110 032. (PAN : AANPS1611E) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Ved Jain, Advocate Ms. Kanishka Garg, CA REVENUE BY : Shri Raghubir Singh, Sr. DR Date of Hearing : 15.07.2026 Date of Pronouncement : 09.09.2026 O R D E R PER S.RIFAUR RAHMAN,AM: 1. This appeal is filed by the assessee against the order passed by the ld. Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [for short ‘ld. CIT (A)] dated 09.01.2026 for the Assessment Year 2008-09.

2 ITA No.2551/Del/2026 submitted that during the quantum assessment proceedings, the AO made an addition of Rs.16,92,270/- under section 69C of the Income-tax Act, 1961 (for short ‘the Act’) on account of alleged bogus purchases. Aggrieved by the assessment order, the assessee preferred an appeal before the ld. CIT(A), who set aside the assessment order and restored the matter to the file of the Assessing Officer for fresh assessment. He submitted that pursuant to the directions of the ld. CIT(A), the AO made a fresh assessment vide order dated 20.03.2026. He submitted that in the said order, after considering the submissions and evidences furnished by the assessee, the AO accepted the explanation of the assessee and deleted the entire addition of Rs.16,92,270/- made under section 69C of the Act.

3 ITA No.2551/Del/2026 "The Tribunal as well as the High Court has held that it could not be so for the simple reason that when the original assessment order itself was set aside, the satisfaction recorded therein for the purpose of initiation of the penalty proceedings would also not survive. This, according to us, is the correct proposition of law. " 4. He further submitted that the aforesaid principle has consistently been followed by various judicial forums and relied on various decisions. He submitted that in the present case, not only the original assessment order was set aside by the ld. CIT(A), but in the fresh assessment proceedings, the Assessing Officer himself accepted the explanation of the assessee and deleted the entire addition made under section 69C of the Act. Consequently, the very foundation on which the impugned penalty under section 271(1) (c) was levied has ceased to exist. He submitted that it is well settled that where the quantum addition itself has been deleted, no penalty under section 271(1)(c) can be sustained. He submitted that the penalty being merely consequential, it cannot survive independently in the absence of the addition on which it is founded.

4 ITA No.2551/Del/2026 restored the matter to the file of the Assessing Officer for fresh adjudication. Pursuant to the directions of ld. CIT(A), the AO made a fresh assessment and accepted the explanation of the assessee and deleted the entire addition of Rs.16,92,270/- made under section 69C of the Act. We observed that the very addition forming the sole foundation for initiation and levy of penalty under section 271(1)(c) no longer survives. Accordingly, relying on the decision of Hon'ble Supreme Court in the case of Commissioner of Income-tax, Panchkula v. Jai Laxmi Rice Mills (supra), we hold that since the quantum addition has been deleted, the penalty u/s 271(1)(c) on the said addition does not survive. Hence, we delete the penalty and the present penalty appeal is allowed in favour of the assessee.

Order pronounced in the open court on this 9th day of September, 2026.

Sd/- sd/- (RAJ KUMAR CHAUHAN) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 09.09.2026 TS

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