THE NASHIK MERCHANTS CO-OPERATIVE BANK LIMITED,NASHIK vs. ACIT CIRCLE-1, NASHIK, NASHIK

The brief facts of the case are that, the assessee has filed the return of income for the A.Y. 2012-13 on 27.09.2012 disclosing a total income of Rs. 26,19,39,739/- and the case was select for scrutiny under CASS. The Assessing Officer(A.O) has issued notice u/sec 143(2) and 142(1) of the Act and show cause notice and called for the details and explanations. The AO was not satisfied with the explanations and made (i) Disallowance on account of NPA write-off of Rs.1,82,80,841/- and (ii) disallowance u/sec 14A of the Act of Rs. 17,81,318/-. Aggrieved by the order, the assessee has filed the appeal with the CIT(A) and the CIT(A) has confirmed the disallowance on account of NPA Write off and deleted disallowance u/sec 14A. of the Act and partly allowed the appeal. The Assessee preferred the appeal with the Honble Tribunal and the disputed issue of NPA-Write off was set aside to the file of the A.O for limited verification. Subsequently as per directions, the A.O has issued notice u/sec 142(1) of the Act and called for the details but the A.O was not satisfied with the explanations and made disallowance of NPA Write-off and passed the order u/sec 143(3) r.w.s 254 of the Income Tax Act dated 27.12.2019. Subsequently the Assessing officer issued penalty notice u/sec274 r.w.s u/sec271(1)(c) of the Act and there was compliance and the A.O was not satisfied with the explanations and levied penalty of Rs.56,48,780/- vide order u/sec271(1)(c) of the Act dated 28.03.2025. ITA.No.2920/PUN/2025

Aggrieved by the penalty order, the assessee has filed an appeal with the CIT(A). Whereas the CIT(A) has considered the grounds of appeal, statements of facts and finding of the AO and submissions but confirmed the levy of penalty and dismissed the appeal. Aggrieved by the order of the CIT(A), the assessee has filed appeal before the Hon'ble Tribunal.

At the time of hearing, Ld. AR submitted that CIT(A) has erred in confirming the levy of penalty by the Assessing Officer overlooking the facts and submissions. The Ld.AR emphasized that the quantum addition appeal has not attained finality and is pending before the CIT(A) and addition is debatable and the assessee has a good case on merits and prayed for restoring the penalty issue to the file of the CIT(A). Per Contra, Ld. DR relied on the order of the CIT(A).

We heard the rival submissions and perused the material on record. The sole matrix of the disputed issue envisaged by the Ld.AR that the CIT(A) has erred in sustaining the penalty without providing proper opportunity and has overlooked the facts and material evidences. The Ld.AR mentioned that the quantum addition appeal has not attained finality and is pending before the CIT(A) and addition is debatable and the assessee has a good case on merits and prayed for restoring the disputed penalty issue to the file of the CIT(A). Therefore, we considering the overall facts, circumstances and principles of natural justice shall provide with one more opportunity of hearing and accordingly restore the disputed issue of penalty to the file of the CIT(A) for afresh adjudication and the shall provide adequate opportunity of being heard to the assessee and the assessee should also cooperate in submitting the information for early disposal of appeal.

In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced on the open Court on 23rd July 2026. DIPAK P. RIPOTE PAVAN KUMAR GADALE (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Pune, Dated: 23rd July, 2026 Abhishek Mohan Abhishek Mohan Mohan Date: 2026.07.23 17:41:08 +05'30' आदेशकीप्रतितितिअग्रेतिि / Copy of the Order forwarded to : अिीिार्थी / The Appellant. 1. प्रत्यर्थी / The Respondent.

The Pr. CIT concerned. 4. तिभागीय प्रतितिति, आयकर अिीिीय अतिकरण, “B” बेंच, पुणे/ DR, ITAT, “B” Bench, Pune. गार्डफ़ाइि / Guard File. 5. ////