SANATKUMAR HARIPRASAD BHATT,PATEL CHAKLA, BORSAD vs. DEPUTY DIRECTOR OF INCOME-TAX, INT. TXN., VADODARA, VADODARA

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ITA 1164/AHD/2026Status: DisposedITAT Ahmedabad15 July 2026AY 2011-125 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the original assessment order was set aside, the consequent penalty order did not survive. The penalty order was quashed as the penalty proceedings were initiated afresh in the new assessment order.

What were the facts?

The assessee failed to file a return for AY 2011-12, leading to reassessment and a penalty under Section 271(1)(c). The original assessment order, which formed the basis for the penalty, was later set aside by the ITAT. A fresh assessment order was subsequently passed.

What were the issues?

Whether a penalty order under Section 271(1)(c) can survive when the underlying assessment order is set aside. Whether penalty proceedings initiated afresh in a new assessment order render a prior penalty order infructuous.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 148,Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: SHRI T R SENTHIL KUMAR & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Mohamdanurani Khatri, AR
For Respondent: Shri Rameshwar P Meena, SR-DR
Hearing: 11.06.2026Pronounced: 15.07.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 27.06.2024 for the Assessment Year (A.Y.) 2011-12 in the proceeding u/s 271(1)(c) of the Income Tax Act [hereinafter referred as “the Act”].

2.

There was delay of 580 days in filing of this appeal. The assesse has filed a condonation application explaining the reason for delay. It is submitted that the assessee is a senior citizen and non-resident Indian and was dependent on his authorised representative for filing the appeal.

ITA No. 1164/Ahd/2026 Sanatkumar Hariprasad Bhatt. Vs DDIT, AY- 2011-12 2 The assessee had explained that due to the lapse on the part of the counsel, the present appeal could not be filed in time. It is further submitted that the quantum appeal in respect of which the penalty u/s. 271(1)(c) was imposed was already set aside by the Tribunal and, therefore, the present penalty proceeding had become infructuous. Considering the explanation of the assessee and the merits of the case, the delay in filing of the appeal is condoned.

3.

The brief facts of the case are that the assessee did not file his return of income for A.Y. 2011-12. The case of the assessee was reopened u/s. 148 of the Act, on the basis of information received by the AO about cash deposit of Rs. 26,90,000/- in the bank account of the assesse. The assessment was completed u/s. 143(3) r.w.s 147 of the Act on 24.12.2018 at total income of Rs.28,45,200/-. The AO had also initiated penalty proceeding u/s. 271(1)(c) of the Act, while completing the assessment. Subsequently, a separate penalty order u/s. 271(1)(c) of the Act was passed on 30.12.2021 imposing penalty of Rs.7,28,787/- on the assessee.

4.

Aggrieved with the penalty order, the assessee had filed an appeal before the first appellate authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed. Th

5.

Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:

1.

On the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in confirming the penalty of Rs.7,28,787/- levied by the Ld. AO u/s

ITA No. 1164/Ahd/2026 Sanatkumar Hariprasad Bhatt. Vs DDIT, AY- 2011-12 3 271(1)(c) of the Act. It is respectfully submitted that the assessment order passed u/s 144 read with section 147 of the Act, forming the very basis of the impugned penalty, has already been set aside by the Hon'ble ITAT. Accordingly, the penalty order passed u/s 271(1)(c) of the Act becomes infructuous and unsustainable in law. It is therefore prayed that the penalty order as well as the appellate order be quashed 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has further erred in confirming the penalty of Rs.7,28,787/-levied u/s 271(1)(c) of the Act vide order dated 30.12.2021. Without prejudice to the above, it is submitted that the said penalty is not sustainable even on merits, being illegal and devoid of any justification. It is therefore prayed that the entire penalty be deleted. 3. The appellant craves leave to add, amend, alter, or withdraw any of the above grounds of appeal at or before the time of hearing.

6.

Shri Mohamdanurani Khatri, the Ld. AR of the assessee submitted that the impugned penalty order was passed in respect of addition of Rs. 26.90 lakhs made in the assessment order dated 24.12.2018 passed u/s. 143(3) r.w.s. 147 of the Act. He submitted that the assessment order dated 24.12.2018 was set aside by the Co-ordinate bench of this Tribunal in ITA No. 115/Ahd/2021 dated 28.09.2022 and the matter was restored to the file of the AO for fresh adjudication. As a result, the present penalty order had become infructuous. The Ld. AR further submitted that in pursuance to direction of the Tribunal, the AO had passed a fresh assessment order on 24.05.2024 and penalty proceeding u/s. 271(1)(c) of the Act, was initiated afresh while completing the assessment.

7.

Per Contra Shri Rameshwar P Meena, the Ld. SR-DR fairly conceded that in view of the fresh assessment order passed in pursuance to the direction of the Tribunal and initiation of penalty proceeding afresh, the present penalty order u/s. 271(1)(c) does not survive.

ITA No. 1164/Ahd/2026 Sanatkumar Hariprasad Bhatt. Vs DDIT, AY- 2011-12 4 8. We have considered the rival submissions and the facts of the case. The Co-ordinate bench of the Tribunal vide order in ITA No. 115/Ahd/2021 dated 28.09.2022 had set aside the quantum addition of Rs. 26,90,000/- in respect of which the penalty u/s. 271(1)(c) was imposed and which is subject matter of present appeal. The AO in the assessment order dated 24.05.2024 had also acknowledged the fact that the Tribunal vide order date 28.09.2022 had remanded the quantum addition back to the file of the AO for fresh adjudication. Thus, when the original assessment order dated 24.12.2018 was set aside by the Tribunal, the consequent penalty order u/s. 271(1)(c) of the Act, dated 30.12.2021, does not survive. From the copy of assessment order dated 24.05.2024 brought on record, it is found that the AO has initiated penalty proceeding u/s. 271(1)(c) of the Act, afresh. Considering these facts, the penalty order u/s. 271(1)(c) of the Act, dated 30.12.2021 is quashed and the grounds taken by the assessee are allowed.

9.

In the result, the appeal of the assessee is allowed.

Order pronounced in the Court on 15/07/2026 at Ahmedabad.

Sd/- Sd/- (T R SENTHIL KUMAR) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 15th July, 2026 Neelesh, Sr. PS (True Copy) आदेश क� आदेश क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : आदेश आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)

ITA No. 1164/Ahd/2026 Sanatkumar Hariprasad Bhatt. Vs DDIT, AY- 2011-12

5.

िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file. आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार पंजीकार (Dy./Asstt.Registrar) उप उप/सहायक उप उप सहायक सहायक पंजीकार सहायक पंजीकार पंजीकार आयकर अपीलीय आयकर अपीलीय अिधकरण अिधकरण, अहमदाबाद अहमदाबाद / ITAT, Ahmedabad आयकर आयकर अपीलीय अपीलीय अिधकरण अिधकरण अहमदाबाद अहमदाबाद

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