BHARAT FILLING STATION ,ROORKEE vs. INCOME TAX OFFICER, ROORKEE

ITA No.254/DDN/2026 BHARAT FILLING STATION IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH “DB” DEHRADUN BEFORE SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER ITA No.254/DDN/2026 Assessment Year: 2019-20 BHARAT FILLING STATION, Vs INCOME TAX OFFICER, Laksar Road, Dhandhera, Roorkee Cantt, Income Tax Office, S.O. Roorkee Haridwar 247667, Ward 1(3)(4), 16 Civil Lines, Uttarakhand, India, Roorkee. Roorkee, Haridwar 247667, PAN No. AAHFB9598F Uttarakhand. Appellant Respondent Assessee by Shri Pavitra H. Arora, Adv. Revenue by Shri Deepak Chaudhary, JCIT Date of hearing: 22.07.2026 Pronouncement on 22.07.2026 O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER:

1.1 The facts in brief are that the assessee is in the business of retail sale of automotive fuel. The assessee did not file any Return of Income for AY 2019-20, thereafter, the Ld. AO issued a notice u/s 148 of the Act and completed the assessment in an ex-parte manner, with penalty proceedings u/s 271B being initiated for violation of the provisions of

ITA No.254/DDN/2026 BHARAT FILLING STATION section 44AB of the Act. Thereafter the Ld. AO levied the impugned penalty through order dated 25.06.2024.

1.2 The assessee had challenged this action before the Ld. CIT(A), where he could not succeed.

1.3 The aggrieved assessee has approached the ITAT with six grounds

of appeal challenging the impugned action.

chronology of events as under:

SI. No. Date Event

Extended due date for filing return of income for A.Y. 2019-20. Return could not be filed owing to dispute between the partners, 1. 31.10.2019 family issues and ill-health of a partner; books, Balance Sheet and P&L could not be finalized.

Ex-parte assessment completed u/s 147 r.w.s. 144 r.w.s. 144B estimating income at Rs. 29,51,360/- (8% of presumed turnover of 3. 10.01.2024 Rs. 3,68,92,000/-, being cash deposits in Bank of Baroda). Penalty proceedings u/s 271B initiated therein.

Upon resolution of the dispute between the partners, Balance Sheet/P&L Account were prepared and duly audited by the 4. 30.03.2024 Chartered Accountants.

Reply to show-cause notice for penalty u/s 271B filed vide Ack. No. 6. 20.05.2024 227141861200524; quantum appeal also filed before CIT(A).

ITA No.254/DDN/2026 BHARAT FILLING STATION

Penalty order u/s 271B passed levying penalty of Rs.1,50,000/- 7. 25.06.2024 without dealing with the explanation of the appellant.

Ld. CIT(A), NFAC, in the quantum appeal [DIN & Order No. ITBA/NFAC/S/250/2025- 26/1084776261(l)] set aside the ex-parte 8. 14.01.2026 assessment u/s 251(l)(a) and restored the matter to the AO for fresh assessment.

The Ld. AR vehemently argued on two counts. It was the submission that there was “reasonable cause” as envisaged u/s 273B of the Act since there was a dispute between the partners, leading to neglect of statutory responsibilities by the assessee. It was submitted that this fact was duly intimated to the authorities below. The second limb of the argument was that since the quantum matter had been remanded back then the satisfaction prior to initiating a penalty would cease to exist, thereby leading to the penalty itself becoming infructuous. The Ld.AR relied on the case of Umakant Sharma [ITA No.364 to 366/Ind./2022, order dated 19.07.2023] for this proposition.

2.1 The Ld. DR relied on the orders of the authorities below.

ITA No.254/DDN/2026 BHARAT FILLING STATION indeed there is no assessment order through which any finding regarding the said default u/s 44AB of the Act could be visible, as the CIT(A) has remanded the quantum matter back to the file of Ld. AO for fresh assessment. In this regard, we are amply fortified by the order of Umakant Sharma (supra), which is on a penalty u/s 271E, but the principles are equally applicable here. The operational portion of the same is as under: -

“10. Thus, the Hon’ble Supreme Court has affirmed the view of the Hon’ble High Court that in absence of satisfaction recorded regarding the penalty proceedings u/s 271E of the Act the order of levy of penalty is not valid. The Ahmedabad Bench of the Tribunal in case of Vijayaben G. Zalavadia vs. JCIT (supra) has considered an identical issue as under: “6. We have heard the respective parties and also perused the relevant materials available on record. 7. We find that on the identical set of facts the Punjab and Haryana High Court was pleased observe the following while upholding quashing of penalty by the Tribunal: “3. We have heard learned counsel for the appellant. 4. The only point for consideration in this appeal is whether the assessee had contravened the provisions of Section 269T of the Act by making repayment of loan/deposits of Smt. Kusum Lata Thakral, through account payee cheque or account payee drafts to M/s. Babyloan Builders Pvt. Ltd., Gurgaon and, therefore, penalty under Section 271E was leviable. 5. The Assessing Officer had levied the penalty amounting to Rs. 11,02,6107- which has been deleted by the Tribunal. The Tribunal while deleting the penalty recorded that the return of the assessee was processed as on 31.12.2003 and the notice u/s. 274 read with section 271E of the Act was issued on 12.06.2007. Such notice was issued when there was no proceedings pending before the Assessing Officer. Relying upon Delhi High Court judgment in CIT v. Standard Brands Ltd. [20061 285 ITR 295/155 Taxman 383, the Tribunal further observed that action for penalty may be permissible only after regular assessment has been framed and since no regular assessment order had been passed in this case, the recourse to penalty proceedings under Section 27IE were not justified. The findings recorded by the Tribunal read thus:-

ITA No.254/DDN/2026 BHARAT FILLING STATION "Having heard the parties and having perused the material on record, we find the grievance of the assessee to be correct. In this case, the return of the assessee was processed u/s. 143(l)(a) of the Income-tax Act, on 31.12.2003. Notice u/s. 274 read with 271E of the Act was issued to the assessee on 12.06,2007. It being a case of processing the return of income, there is no finding in the AO's order with regard to the applicability or otherwise of section 269T of the IT Act to the assessee's case. It was within the purview of the AO to bring the assessee's case to scrutiny and to make regular assessment u/s. 143(3) of the Act. It was also within the power of the AO at the appropriate stage to initiate proceedings u/s. 147 of the Act against the assessee. No such action was taken. Rather, the penalty was imposed on the basis of the finding in the case of assessee's wife." 6. No error or perversity could be shown in the aforesaid findings recorded by the Tribunal. Moreover, the assessee had taken a plea before the Assessing Officer that there was a reasonable cause for the assessee to have made direct payment of Rs.14,02,600/- to M/s. Babyloan Builders Private Ltd., Gurgaon. It was pleaded that some of the repayments made by the assessee were inter-company transfer for group housing and purchase of flat and at times payments were made after closure of banking hours. It was further submitted that the payments made were genuine and no tax evasion was involved and the default, if any, was of technical nature. The explanation being plausible one, it cannot be said that there was no reasonable cause within the meaning of Section 273B of the Act. No substantial question of law arises in this appeal. 8. We find substances in the submissions made by the Ld. A.R. particularly after considering the order passed by the Hon’ble Punjab and Haryana High Court as cited hereinabove. In fact, on the identical set of facts the penalty under Section 271E was deleted by the Tribunal and further upheld by the Hon’ble High Court. 9. Having regard to the facts and circumstances of the case and the ratio laid down in the order passed by the Punjab and Haryana High Court we do not hesitate to hold that the impugned penalty under Section 271E is not permissible in the absence of regular assessment framed against the assessee by the Revenue. Hence, the same is not found to be sustainable in the eye of law and, thus, quashed. The appeal preferred by the assessee is, therefore, allowed.” 11. Therefore, it is pre-requisite condition that the initiation of penalty 271D/271E of the Act, there must be assessment proceedings or proceedings arising from assessment order are pending in the case of the assessee. Accordingly in the facts and circumstances of the case and following the judgment of Hon’ble Supreme Court as well as Coordinate Bench of the Tribunal in case of Vijayaben G. Zalavadia vs. JCIT (supra), we hold that the penalty levied u/s 271D of the Act without any ITA No.364 to 366/Ind/2022 Umakant Sharma Page 9 of 9 Page 9 of 9 assessment proceedings in the case of the assessee is not valid and liable to be quashed. We order accordingly.”

ITA No.254/DDN/2026 BHARAT FILLING STATION Considering that there is no assessment order through which any finding regarding the default u/s 44AB could be understood and, therefore, there is now an absence of satisfaction prior to initiation of penalty proceedings. Also, the assessee has been able to demonstrate “reasonable cause” within the purview of section 273B of the Act. For both these reasons, the impugned penalty cannot be legally sustained and the same is directed to be deleted.

Order pronounced in the open court on 22.07.2026

Sd/- Sd/- (RAJ KUMAR CHAUHAN) (SANJAY AWASTHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 17.08.2026 *Kavita Arora, Sr. P.S. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI