VENUKUMAR REDDY POLICEREDDY,MAHABUB NAGAR vs. ITO, WARD- 1, MAHBUBNAGAR

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ITA 484/HYD/2026Status: DisposedITAT Hyderabad15 July 2026AY 2023-2412 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in deciding the penalty appeals before the outcome of the pending quantum appeal. The Tribunal also noted that the assessee was not given a proper opportunity of hearing in one of the penalty appeals.

What were the facts?

The assessee's appeals against penalty orders under Sections 270A and 272A(1)(d) were dismissed by the CIT(A). The assessee argued that the quantum appeal against the assessment order was still pending, and the penalty appeals were decided ex-parte without proper opportunity.

What were the issues?

Whether penalty appeals can be decided before the adjudication of the related quantum appeal and whether proper opportunity of hearing was provided to the assessee.

Which sections of the Income-tax Act were involved?

Section 270A,Section 272A(1)(d),Section 142(1),Section 273B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD

Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G.

Pronounced: 15.07.2026

PER VIJAY PAL RAO, VICE PRESIDENT:

These two appeals by the Assessee are directed against the two separate Orders of the learned CIT(A)- National Faceless Appeal Centre [in short "NFAC"], Delhi, dated 14.01.2026 and 13.01.2026 arising from penalty order passed u/sec.270A and 272A(1)(d) of the Income Tax Act [in short "the Act"], 1961, respectively, for the assessment year 2023-2024.

ITA.No.483/Hyd./2026 – AY 2023-2024:

2.

The assessee has raised the following grounds of appeal:

“The Ld. CIT(A) erred in dismissing the appeal vide his 1) order u/s 250 of the Act on 14-01-2026 against the Penalty order u/s 270A of the Act passed on 25-08- 2025 by the AO which is prejudicial to the interest of the Appellant to the extent both on facts and in law. 2) The Ld. CIT(A) erred in not understanding the fact that assessment proceedings and penalty proceedings are independent to each other and mere addition in

3 ITA.Nos.483 & 484/Hyd./2026 assessment proceedings cannot be reason to levy penalty. 3) The Ld. CIT(A) erred in levying penalty u/s 270A which is unjustified & unwarranted as there is neither under reported OR mis reported the income on behalf of assessee 4) The Ld. CIT(A) erred in confirming the penalty without appreciating that the addition was made on difference of opinion and not on account of any undisclosed income attracting penal provisions. 5) The Ld. CIT(A). erred in not providing proper opportunity of being heard to the assessee to furnish the information and hurriedly imposed penalty u/s. 270Aof the Act and the penalty levied is void ab initio. 6) Appellant may, add OR alter OR amend OR modify OR substitute OR delete and/OR rescind all OR any of the grounds of appeal at any time before OR at the time of hearing of the appeal.”

3.

At the time of hearing, learned Counsel for the Assessee has submitted that the quantum appeal filed by the assessee is pending adjudication before the learned CIT(A). He has referred to Form-35 placed at Page nos.10 to 23 of the paper book and the screen shot of the First Appellate Proceedings status placed at Page-24 of the paper book.

4 ITA.Nos.483 & 484/Hyd./2026 Thus, the learned Authorised Representative of the Assessee has submitted that the learned CIT(A) has decided the penalty appeal of the assessee ex-parte without deciding the quantum appeal of the assessee pending adjudication before the learned CIT(A). He has further submitted that the appeal against the penalty u/sec.272A(1)(d) is also decided ex-parte and assessee could not explain the cause of default in compliance of the notice u/sec.142(1) of the Act. Thus, the learned Authorised Representative of the Assessee has submitted that the impugned orders of the learned CIT(A) may be set aside and matters may be remanded to the record of the learned CIT(A) for adjudication of the appeals after giving a proper opportunity of hearing to the assessee as well as after the outcome of the appeal filed by the assessee against the assessment order. The learned Authorised Representative of the Assessee has relied upon the Order of this Tribunal placed at pages 35 to 41 of the paper book in the case of SPR Publications Private Limited vs. ITO, Ward-3(1), Hyderabad in ITA.No.1776/Hyd./2025 for the

5 ITA.Nos.483 & 484/Hyd./2026 assessment year 2011-2012 vide Order dated 03.07.2026.

4.

On the other hand, the learned DR has submitted that despite sufficient opportunities, the assessee did not appear and file any reply and explanation before the learned CIT(A) therefore, the appeals of the assessee were decided ex- parte. He has relied upon the Orders of the authorities below.

5.

We have considered the rival submissions as well as relevant material on record. At the outset, we note that the appeal of the assessee against the penalty levied u/sec.270A of the Act was dismissed by the learned CIT(A) and thereby, the order of the Assessing Officer passed u/sec.270A is upheld without considering the fact that the assessee challenged the assessment order by filing an appeal which is pending adjudication before the learned CIT(A). The assessee has filed the screen shot of the status of the appeal filed against the assessment order placed at page no.24 of the paper book as under:

6 ITA.Nos.483 & 484/Hyd./2026

7 ITA.Nos.483 & 484/Hyd./2026 5.1. Thus, as per the status reflected in the ITBA-Portal proceedings the appeal filed by the assessee is pending adjudication before the learned CIT(A) and the response was invited from the assessee till 06.03.2026 whereas the impugned order was passed by the learned CIT(A) on 14.01.2026 which is prior to the adjudication of the quantum appeal. This Tribunal in the case of SPR Publications Private Limited vs. ITO, Ward-3(1), Hyderabad vide Order dated 03.07.2026 (supra), has considered an identical issue in Para nos.5 and 5.1 as under:

“5. We have considered the rival submissions as well as relevant material on record. The learned CIT(A) despite this fact brought to its notice that quantum appeal is still pending adjudication, has dismissed the appeal filed by the assessee against the penalty vide impugned order. The relevant part of the observation of the learned CIT(A) in Para nos.5.4 and 5.5 are as under: “5.4. As regarding adjudication of the quantum appeal, there is no such pending appeal with me. Even, if the said quantum appeal is lying undisposed with some other CIT(A), the outcome of the same will not have any bearing upon the penalty appeal in view of section 275(1A) of the Act. In case the appellant gets relief in the

8 ITA.Nos.483 & 484/Hyd./2026 quantum the penalty u/s 271(1)(c) of the Act the amount will be modified accordingly by the AO in view of the said section.

5.5. Considering the discussion made above, I find the Id AO was justified in imposing penalty and find no reason to alter his decision and accordingly confirm the penalty of Rs.5,22,000/- imposed u/s 271(1)(c) of the Act for concealing the particulars of income. In view of this, the grounds raised by the appellant are dismissed.”

5.1. The penalty u/sec.271(1)(c) is leviable only against the addition made by the Assessing Officer in the assessment proceedings and therefore, the outcome of the quantum appeal has a direct bearing on the levy of penalty u/sec.271(1)(c). Once this fact was brought to the notice of the learned CIT(A) that the quantum appeal is still pending adjudication, the learned CIT(A) ought to have decided the penalty appeal only after the outcome of the quantum appeal. The learned Authorised Representative of the Assessee has filed the status of the appeal filed by the assessee as per e-proceeding portal of the department showing the appeal is pending. Therefore, in the facts and circumstances of the case, when the quantum appeal is still pending adjudication before the learned CIT(A), the Order passed by the learned CIT(A) dismissing the appeal of the assessee against the penalty u/sec.271(1)(c) is not justified and the same is set aside. Accordingly, the matter is

9 ITA.Nos.483 & 484/Hyd./2026 remanded to the record of the learned CIT(A) for adjudication of the appeal of the assessee against the penalty u/sec.271(1)(c) only after the outcome of the quantum appeal pending adjudication before the learned CIT(A). Needless to say, the assessee be given an opportunity of hearing before passing the fresh order.”

5.2. Thus, when the quantum appeal is still pending adjudication before the learned CIT(A), then Order passed by the learned CIT(A) dismissing the appeal of the assessee filed against the penalty levied u/sec.270A of the Act is not justified and the same is set aside. Accordingly, the matter is remanded to the record of the learned CIT(A) for fresh adjudication of the appeal filed by the assessee against the penalty u/sec.270A of the Act after giving proper opportunity of hearing to the assessee as well as after the outcome of the quantum appeal pending adjudication before the learned CIT(A).

6.

In the result, appeal ITA.No.483/Hyd./2026 of the Assessee is allowed for statistical purposes.

10 ITA.Nos.483 & 484/Hyd./2026 ITA.No.484/Hyd./2026 – AY 2023-2024:

7.

As regards the appeal filed by the assessee against penalty u/sec.272A(1)(d) of the Act, the learned CIT(A) has dismissed the appeal of the assessee on the ground that the assessee has not explained the reasonable cause for non- compliance of notice u/sec.142(1) of the Act. We further note that the learned CIT(A) has not given an opportunity of hearing to the assessee before passing the impugned order. We further note that the quantum appeal is pending adjudication before the learned CIT(A) as well as the fact that the assessee was not given an effective opportunity of hearing as stated in Para no.5.5 of the impugned order as under: “5.5. During the course of appeal proceedings, the assessee has only stated that the non-compliance was not deliberate but due to lack of proper guidance and the penalty is liable to be deleted in view of section 273B.”

7.1. Thus, the learned CIT(A) has considered the statement of facts and grounds of appeal while passing impugned order and no opportunity of hearing or explanation of the assessee was given before passing the impugned order.

11 ITA.Nos.483 & 484/Hyd./2026 Further, when we have already set aside the matter in respect of levy of penalty u/sec.270A of the Act therefore, in the facts and circumstances of the case and in the interest of justice, the impugned order passed by the learned CIT(A) is set aside and the matter is remanded to the record of the learned CIT(A) for fresh adjudication after giving proper opportunity of hearing to the assessee as well as after the outcome of the quantum appeal filed by the assessee pending adjudication before the learned CIT(A).

8.

In the result, ITA.No.484/Hyd./2026 of the Assessee is allowed for statistical purposes.

9.

To sum up, both the appeals of the Assessee are allowed for statistical purposes. A copy of this common order be placed in the respective case files.

Order pronounced in the open Court on 15.07.2026.

Sd/- Sd/- [MANJUNATHA G.] [VIJAY PAL RAO] ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated 15th day of July, 2026 VBP

12 ITA.Nos.483 & 484/Hyd./2026 Copy to: VENUKUMAR REDDY POLICEREDDY, H.NO 10-70 MARLU POLICE COLONY, MAHBUBNAGAR-509001, 1 TELANGANA ITO, WARD-1, O/O ITO, WARD-1, AYAKAR BHAWAN, 2 MAHBUBNAGAR, MAHBUBNAGAR-509001, TELANGANA 3 THE Pr. CIT, HYDERABAD. 4 THE D.R., ITAT, HYDERABAD SMC-BENCH, HYDERABAD 5 GUARD FILE TRUE COPY VADREVU Digitally signed by VADREVU PRASADA PRASADA RAO ASSISTANT REGISTRAR/ Date: 2026.07.15 RAO I.T.A.T., HYDERABAD 11:50:45 +05'30'

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