VAISHALI KETAN GANDHI,MUMBAI, VILE PARLE EAST vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-5(4), MUMBAI, MUMBAI

The year-specific particulars are as follows: Particulars A.Y. 2019-20 A.Y. 2020-21 A.Y. 2022-23 Present appeal ITA ITA No. ITA No. No.6136/Mum/2026 6192/Mum/2026 6176/Mum/2026 Assessment order 22.03.2024 21.03.2024 20.03.2024 dated Assessment Section 144 r.w.s. Section 147 Section 143(3) provision, as 147 recorded in the penalty order Additions forming Rs.33,04,887/- Rs.5,94,180/- Rs.62,85,220/- the basis of penalty Provisions under Sections 68, 69 and Sections 68 and Sections 68 and which additions 69C 69 69C were made Penalty order 13.09.2024 13.09.2024 13.09.2024 dated Penalty confirmed Rs.2,57,780/- Rs.46,346/- Rs.4,90,247/- by the CIT(A)

The assessee is an individual. Consequent upon the search conducted in the MCGM group on 25.02.2022, in which the assessee was also covered under section 132 of the Act, the assessments for A.Ys. 2019-20 and 2020-21 were reopened, whereas the assessment for A.Y. 2022-23 was completed under section 143(3) of the Act. In these assessments, the Assessing Officer made additions towards

The Assessing Officer initiated penalty proceedings under section 271AAC(1) of the Act on the ground that the income determined in the respective assessments included income falling within the aforesaid provisions and chargeable to tax under section 115BBE of the Act. During the penalty proceedings, notices under section 274 read with section 271AAC(1) were issued on 31.07.2024 and 08.08.2024. According to the penalty orders, the assessee did not furnish any reply to these notices. The Assessing Officer accordingly proceeded to levy penalties as tabulated above respectively, by separate orders dated 13.09.2024.

Aggrieved, the assessee preferred appeals before the learned CIT(A), contending that the penalties were not automatic merely because additions had been made under sections 68, 69 and 69C of the Act. The learned CIT(A) condoned the delay of 33 days in filing each of these appeals and admitted them for adjudication. During the

The learned CIT(A), however, observed that despite the opportunities afforded, the assessee had not furnished substantive submissions against the levy of penalties. He further observed that the impugned income had neither been included in the returns furnished under section 139 nor had the corresponding tax under section 115BBE been paid within the period prescribed in the proviso to section 271AAC(1). On this basis, he held that the assessee was not entitled to the protection of the said proviso. He also relied upon the confirmation of the underlying additions in the quantum appellate orders dated 13.12.2025. Accordingly, by separate orders dated 26.03.2026, the learned CIT(A) confirmed the penalties for all three assessment years.

The assessee is now in appeal before us against the confirmation of these penalties. The grounds are substantially identical in all three appeals, except for the penalty amounts and the provisions under which the underlying additions were made. The grounds for A.Y. 2019-20 in ITA No.6136/Mum/2026 are reproduced below:

Since the impugned penalties arise from the very additions under reconsideration, The learned AR requested that the penalty appeals also be restored for disposal in accordance with law. The learned DR raised no objection.

We have considered the rival submissions and perused the material on record. The orders placed before us establish that the quantum appeals for all three assessment years have been restored to the learned CIT(A).

Thus, the additions forming the basis of the impugned penalties require fresh adjudication in the quantum proceedings. In these circumstances, the penalty appeals also require reconsideration in light of the outcome of the respective quantum appeals. Accordingly, we set aside the impugned orders dated 26.03.2026 and restore all three penalty appeals to the file of the learned CIT(A), who shall decide them afresh, in accordance with law, after disposal of the corresponding quantum appeals and after affording the assessee a reasonable opportunity of being heard. All contentions concerning the leviability and computation of the penalties are left open. The assessee shall duly comply with the notices issued and furnish the requisite submissions. The conditions imposed in the earlier quantum orders remain unaffected.

In the result, the assessee’s appeals in ITA Nos.6136/Mum/2026, 6192/Mum/2026 and 6176/Mum/2026 are allowed for statistical purposes.