BUDDHA SRIDHAR VEERA VENKATA NAGA SATYA,HYDERABAD vs. ITO WARD 24(1)(1), MUMBAI

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ITA 3434/MUM/2026Status: DisposedITAT Mumbai17 August 2026AY 2017-184 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the assessment order forming the basis of the penalty no longer survives, the penalty is liable to be deleted. The appeal was allowed, setting aside the CIT(A)'s order and directing the deletion of the penalty.

What were the facts?

The Assessing Officer treated Rs. 28,66,000 as unexplained investment under section 69 and levied a penalty under section 271AAC(1). The CIT(A) confirmed this penalty. However, the quantum assessment order, which formed the basis for the penalty, was later set aside by a co-ordinate bench and restored to the Assessing Officer for a de novo assessment.

What were the issues?

Whether the penalty levied under section 271AAC(1) can be sustained when the underlying assessment order has been set aside and restored for de novo assessment.

Which sections of the Income-tax Act were involved?

Section 69,Section 271AAC(1),Section 147,Section 144,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, MUMBAI

Before: SHRI SANDEEP GOSAIN & SHRI JAGADISH

For Appellant: Shri P. Murli Mohan Rao (virtually appeared)
Hearing: 30.07.2026Pronounced: 17.08.2026

Per: SHRI JAGADISH, A.M.:

1.

This appeal by the assessee is directed against the order dated 25.09.2025 passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [“the learned CIT(A)”], under section 250 of the Income-tax Act, 1961 (“the Act”), for the assessment year 2017-18. The order appealed against arises from the penalty order dated 22.09.2022 passed under section 271AAC(1) of the Act, levying penalty of Rs.2,21,398.

ITA No.3434/M/2026 Buddha Sridhar Veera Venkata Naga Satya

2.

The assessee has raised various grounds challenging the confirmation of penalty. The effective grievance is that the learned CIT(A) erred in sustaining the penalty levied under section 271AAC(1) of the Act.

3.

Briefly stated, the Assessing Officer completed the reassessment under section 147 read with section 144 of the Act on 28.03.2022 by treating Rs.28,66,000 as unexplained investment under section 69 of the Act. Consequent thereto, penalty of Rs.2,21,398 was levied under section 271AAC(1). The learned CIT(A) confirmed the penalty.

4.

Before us, the learned Authorised Representative submitted that the quantum assessment forming the sole basis of the impugned penalty has since been set aside by the Co-ordinate Bench in ITA No.7181/Mum/2025, vide order dated 07.07.2026, and the entire matter has been restored to the Assessing Officer for a de novo assessment. The learned Departmental Representative relied on the orders of the authorities below.

5.

We have heard the rival submissions and perused the material on record. We find that the Co-ordinate Bench, while deciding the assessee’s quantum appeal in ITA No.7181/Mum/2025, has held as under:

“6.1 In the light of above facts of the case, we deem it appropriate to set aside the orders of the lower authorities and restore the entire issue to the file of the Assessing Officer to pass de novo assessment after allowing adequate opportunity of hearing to the assessee who, in turn, would ensure necessary compliance. Further, the assessee is allowed liberty to file any additional evidence or ground to canvass his case before the assessing authority. Accordingly, the grounds of appeal are allowed for statistical purposes.”

ITA No.3434/M/2026 Buddha Sridhar Veera Venkata Naga Satya

6.

Thus, the assessment order containing the addition under section 69, on the basis of which the impugned penalty was levied, no longer survives in its original form. Consequently, the penalty arising from that assessment has no legs to stand and is liable to be deleted. We, therefore, set aside the order of the learned CIT(A) and direct the Assessing Officer to delete the penalty of Rs.2,21,398 levied under section 271AAC(1) of the Act. The Assessing Officer shall, however, be at liberty to initiate penalty proceedings afresh, in accordance with law, if warranted by the outcome of the de novo assessment.

7.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open court on 17/08/2026.

Sd/- Sd/- (SANDEEP GOSAIN) (JAGADISH) Judicial Member Accountant Member

Mumbai, Dated: 17/08/2026 Ashwani Rao Sr. Private Secretary

ITA No.3434/M/2026 Buddha Sridhar Veera Venkata Naga Satya

Copy of the order forwarded to: 1. Appellant 2. Respondent 3. The CIT 4. The CIT (Appeals) 5. The DR, I.T.A.T. By order

(Assistant Registrar) ITAT, Mumbai

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