NUCLEUS FINCONS PVT LTD (SINCE STRIKE OFF BY ROC ON 24/02/2017 THROUGH ERSTWHILE DIR. KISHORE PATKI),MUMBAI vs. ITO 15(2)(1), MUMBAI, MUMBAI

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ITA 4588/MUM/2026Status: DisposedITAT Mumbai20 August 2026AY 2012-136 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the quantum appeal for the same assessment year was remanded to the CIT(A) for a decision on merits. Therefore, the penalty matter was also remanded to the CIT(A) for a fresh decision after providing the assessee with an opportunity to be heard.

What were the facts?

The assessee company had unexplained cash deposits and large credit/debit entries in its bank account, leading to additions to income. Penalty proceedings were initiated for concealment of income. The company was also struck off by the Registrar of Companies before reassessment notices were issued.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied when the company was struck off before reassessment proceedings, and whether the penalty order is valid without a proper opportunity of being heard.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 68,Section 148,Section 147,Section 144,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI

Before: SMT BEENA PILLAI & SMT RATNA DASGUPTA

For Appellant: Shri Hitesh Jain, (virtually appeard)
For Respondent: Shri Kumar C. SR AR
Hearing: 07/08/2026Pronounced: 20/08/2026

PER RATNA DASGPUTA, AM The captioned appeal by the assessee arises out of order dated 13/04/2026 under section 250 of the Income-tax Act (hereinafter referred to as “the Act”) by the National Faceless Appeals Centre, Delhi [hereinafter referred to as Ld. CIT(A)],

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confirming the penalty u/s 271(1)(c) of the Act levied by the Assessing Officer [hereinafter referred to as Ld. AO] for concealment of income.

2.

The assessee has raised the following grounds of appeal;- i. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) has passed the order without even issuing a notice u/s 250 of the I. T. Act, 1961. Thus, the said action of the Hon'ble CIT(A) of dismissing the appeal without even giving an opportunity of being heard is grossly incorrect, invalid and bad in law and against the principles of natural justice.

ii. On the facts and circumstances of the case and in law, the Ld. A.O. has erred by initiating and levying the penalty u/s 271(1)(c) of the I. T. Act, 1961 and the action of the Hon'ble CIT(A) confirming the said penalty order is grossly incorrect, invalid and bad in law.

iii. On the facts and circumstances of the case and in law, the Ld. A.O. has erred by issuing a notice dated 26/03/2019 u/s 148 of the I. T. Act, 1961 since the company was striked off by ROC from 24/02/2017 and communication of the same was also sent to Chief Commissioner of Income Tax by ROC. Since the notice u/s 148 of the I. T. Act, 1961 was issued on non- existing entity, the initiation and levying of penalty is grossly incorrect, invalid and bad in law.

iv. On the facts and circumstances of the case and in law, the Ld. A.O. has erred in levying penalty of Rs. 8,30,682/- u/s 271(1)(c) of the I. T. Act, 1961 without understanding the facts of the case. The said action of the Ld. A.O. is grossly incorrect, invalid and bad in law.

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v. The appellant craves leave to add, alter, amend or modify any or all grounds till the disposal of the Appeal.

3.

Save for ground (iii) above, all the other grounds of appeal are on the broad issue of levy of penalty u/s 271(1)(c) of the Act. Ground (iii) should essentially have been taken up with quantum appeal. 4. Briefly stated, the facts of the case are that the penalty order in the present case has emanated from reassessment proceedings under section 147 of the Act. The case was reopened on the basis of information that during the relevant year, the assessee had deposited cash of Rs. 7,70,000/- in his bank account with HDFC Bank but had not filed return of income for that year. The assessee, however, did not co-operate in the assessment proceedings and, in the absence of any explanation regarding the source of the cash deposits, the same were treated as unexplained income under section 68 of the Act. The Ld. AO also observed from the bank statements that there were total credit entries of Rs. 9,94,14,500/- along with corresponding debit entries of the same amount. Since no submissions were made to explain these transactions, the Ld. estimated income @ 1% of both credits and debits, culminating in further addition of Rs. 19,88,290/-. Assessment was, accordingly, completed u/s. 144 r.w.s. 147, determining total income at Rs. 26,88,290/- and penalty proceedings were initiated u/s 271(1)(c) of

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the Act for concealment of income. During penalty proceedings, the assessee did not respond to multiple notices issued, and only partially responded to a subsequent show cause notice. In the absence of any satisfactory explanation to justify the unexplained cash deposits or the estimated income, the AO imposed penalty of Rs. 8,30,682/- for concealment of income. 4.1. During the appellate proceedings, it was observed by the Ld. CIT(A) that the addition of Rs. 26,88,290/- u/s 143(3) r.w.s 147 of the Act had been confirmed in quantum appeal at the first appellate stage. His view was that once quantum addition is sustained, the findings regarding concealment of income stand established. Negating the assessee’s contention that penalty cannot be levied where income is determined on estimate basis, he held the view that estimation in this particular case was not arbitrary but based on concrete material. Since the assessee had failed to furnish satisfactory explanation regarding the nature and source of the impugned transactions, he confirmed the penalty levied by the Ld. AO, citing various judicial pronouncements which held, inter alia, that where the assessee fails to offer a satisfactory explanation, penalty u/s 271(1)(c) of the Act is leviable. 4.2 It is against the aforesaid order that the assessee is in appeal before this Tribunal.

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5.

We have heard the submissions of both the parties. It was pointed out by the assessee’s Ld. Authorized Representative that in the assessee’s own case, for quantum appeal before this Tribunal for the same assessment year, the case was remanded to the Ld. CIT(A) for decision on merits by order dated 21/01/2026. Since this Tribunal has restored the quantum appeal to the file of Ld. CIT(A), it is our considered opinion that it would be in the fitness of things to also remand the penalty matter to the Ld. CIT(A) for fresh decision after affording the assessee adequate opportunity of being heard. 6. In the result, the appeal of the assessee stands allowed for statistical purposes. Order pronounced in the open Court on 20/08/2026

Sd/- Sd/- (BEENA PILLAI) (RATNA DASGPUTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 20/08/2026 Z.U., P.S. Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER,

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//True Copy// (Assistant Registrar) ITAT, Mumbai

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