ANGAD YADAV,NEW DELHI vs. AO 34-7, CIVIC CENTER

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ITA 2788/DEL/2026Status: DisposedITAT Delhi15 July 2026AY 2011-123 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty under section 271(1)(c) of the Income Tax Act, 1961, is levied with reference to the concealment of income or furnishing of inaccurate particulars, which is embodied in the addition made during assessment. The Tribunal noted that the position in law is well-settled: where the addition itself is deleted in the quantum proceedings, the substratum of the penalty disappears, and the penalty cannot survive. Since the quantum addition made in the assessment order dated 22.09.2021 was deleted by a Co-ordinate Bench of the Tribunal in the quantum appeal, the penalty levied under section 271(1)(c), being consequential to that addition, has no legal basis. Therefore, the Assessing Officer is directed to delete the penalty. The appeal of the assessee is allowed.

What were the facts?

The assessee, Shri Angad Yadav, is in appeal against the order of the CIT(A), NFAC, Delhi, dated 29 January 2026. This order confirmed the penalty levied under section 271(1)(c) of the Income Tax Act, 1961, for Assessment Year 2011-12. The original assessment was framed by the NFAC, Delhi, under section 147 read with section 254 and section 144B, determining the total income at Rs 10,85,000. Following this, penalty proceedings under section 271(1)(c) were initiated, and a penalty of Rs 1,84,885 was levied. The CIT(A) dismissed the assessee's appeal against this penalty. Crucially, the quantum addition that formed the basis for the penalty has since been deleted by a Co-ordinate Bench of the Tribunal in a separate appeal (ITA No. 599/Del/2026).

What were the issues?

1. Whether the penalty under section 271(1)(c) of the Income Tax Act, 1961, can survive when the underlying quantum addition has been deleted by the Tribunal? (Question of law) Assessee's Contention: The assessee argued that since the addition forming the very foundation of the penalty has been deleted by the Tribunal in the quantum proceedings, the penalty under section 271(1)(c) cannot legally stand. Revenue's Contention: The Senior Departmental Representative could not controvert the factual position presented by the assessee regarding the deletion of the quantum addition.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 250,Section 147,Section 254,Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘E’ : NEW DELHI

Before: SHRI MAHAVIR SINGH & SHRI MANISH AGARWAL

For Appellant: Shri Manoj Kumar, CA
For Respondent: Shri Tarun Sharda, Senior DR
Hearing: 09.07.2026Pronounced: 09.07.2026

PER MAHAVIR SINGH, VP:

1.

This appeal by the Assessee arises out of the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [‘the CIT(A)’] in Appeal No. NFAC/2010-11/10136907 dated 29 Jan 2026, passed under section 250 of the Income Tax Act, 1961 (‘the Act’), confirming the penalty levied under section 271(1)(c) of the Act for the Assessment Year 2011-12. 2. Briefly stated, the facts are that the assessment in this case was framed by the NFAC, Delhi under section 147 read with section 254 read with section 144B of the Act vide order dated 22.09.2021, determining the total income of the Assessee at Rs 10,85,000 after making addition, penalty proceedings under 2 ITA-2788/Del/2026

section 271(1)(c) of the Act were initiated, and penalty of Rs 1,84,885 was levied vide order dated 17.03.2022. The appeal of the Assessee against the penalty was dismissed by the CIT(A) vide the impugned order. Aggrieved, the Assessee is in appeal before us.

. It is a matter of record that the quantum addition, which constituted the very foundation of the penalty, has since been deleted. The appeal of the Assessee against the order of the CIT(A) in the quantum proceedings was allowed by a Co-ordinate Bench of this Tribunal in ITA No. 599/Del/2026 for the Assessment Year 2011-12, vide order dated 17.03.2026, and the addition made in the assessment order stands deleted.

. The Learned Counsel for the Assessee submitted that since the addition forming the basis of the penalty has been deleted by the Tribunal in the quantum proceedings, the penalty under section 271(1)(c) of the Act cannot survive. The Learned Senior Departmental Representative could not controvert this factual position.

. We have heard both the sides and perused the material on record. The position in law is well settled. Penalty under section 271(1)(c) of the Act is levied with reference to the concealment of income or the furnishing of inaccurate particulars of income embodied in the addition made in the assessment. Where the addition itself is deleted in the quantum proceedings, the very substratum of the penalty disappears, and the penalty cannot survive. Since the addition made in the assessment order dated 22.09.2021 has been deleted by the Co-ordinate Bench of this Tribunal in the quantum appeal, the penalty levied under section 271(1)(c) of the Act, being consequential to that addition, has no legs to stand on. The Assessing Officer is, accordingly, directed to delete the penalty levied under section 271(1)(c) of the Act.

3 ITA-2788/Del/2026

6.

In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on conclusion of hearing on 9" July, 2026. (MANISH AGARWAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT

Date : 15.07.2026 VK.

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