HAFIZ ABDUL HAKEEM MEMORIAL TRUST,BIJNOR vs. INCOME TAX OFFICER, EXEMPTION WARD, BAREILLY

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ITA 893/LKW/2025Status: DisposedITAT Lucknow08 July 2026AY 2019-208 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that penalty proceedings are consequential to the assessment of income. Since the quantum appeal was set aside and restored to the Assessing Officer for de novo assessment, the penalty cannot survive independently.

What were the facts?

The assessee's income was assessed at Rs. 39,50,826/- in an ex-parte order. The first appellate authority dismissed the assessee's appeal. Subsequently, a penalty under section 270A was imposed, which was also confirmed by the first appellate authority.

What were the issues?

Whether the penalty under section 270A can survive when the underlying assessment order has been set aside and restored for fresh assessment.

Which sections of the Income-tax Act were involved?

Section 144,Section 143(3A),Section 143(3B),Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, LUCKNOW BENCH “B”, LUCKNOW

Before: SHRI. SUDHANSHU SRIVASTAVA & SHRI NIKHIL CHOUDHARY

PER SUDHANSHU SRIVASTAVA, J.M.:

This appeal has been preferred by the Assessee against the order dated 16.07.2025, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2019-20.

2.0 The brief facts of the case are that in the case of the assessee, assessment was completed, vide order dated 18.01.2021 passed under section 144 read with sections 143(3A) and 143(3B) of the Income Tax Act, 1961 (hereinafter called 'the Act’), assessing the total income of the assessee at Rs.39,50,826/- as against Nil income returned by the assessee. Aggrieved by the ex-parte order of the AO, the Assessee preferred

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an appeal before the Ld. First Appellate Authority, who dismissed the appeal of the assessee and confirmed the order of the AO by passing an order ex-parte qua the assessee. Against the order of the Ld. First Appellate Authority dated 16.05.2025, the assessee preferred an appeal before the Tribunal, vide ITA No.892/LKW/2025. The Tribunal vide its order dated 12.03.2026 set aside the order of the Ld. First Appellate Authority and restored the matter back to the file of the AO with the direction to pass de novo assessment order in accordance with law on issues in dispute after providing reasonable opportunity to the assessee.

2.1 However, while finalizing the assessment order under section 144 read with sections 143(3A) and 143(3B) of the Act, the AO had initiated penalty proceedings under section 270A of the Act for under reporting/misreporting of income and in this regard Notices were issued to the assessee. However, there was no response from the side of the assessee. The AO, therefore, on the basis of order dated 18.01.2021 passed under section 144 read with sections 143(3A) and 143(3B) of the Act, assessing the total income of the assessee at Rs.39,50,826/-, worked out the penalty under section 270A of the Act @ 50% of the tax payable, which came to Rs.6,16,329/-. The AO, accordingly, imposed a

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penalty of Rs.6,16,329/- under section 270A of the Act, vide order dated 15.03.2022.

2.2 Aggrieved by the order of the AO, imposing a penalty of Rs.6,16,329/- under section 270A of the Act, the Assessee preferred an appeal before the Ld. First Appellate Authority. Subsequently, the appeal was migrated to NFAC, which dismissed the appeal of the assessee and confirmed the order of the AO.

2.3 Now the assessee has approached this Tribunal challenging the order of the NFAC, by raising the following grounds of appeal:

1.

The order of the Ld. CIT (A) has erred in law and against the facts & circumstances of the case while dismissing the appeal, without accepting the main plea of the assessee. 2. That the Ld. CIT (A) has erred in law and against the facts and circumstances of the case for dismissing the appeal without accepting the submissions of the assessee that it has hired a CA for all the taxation work and the management of the trust was not aware of the notices issued during the assessment proceedings. 3. That the Ld. CIT (A) has erred in law and against the facts and circumstances of the case for rejecting the submissions of the assessee by alleging that the appellant has not bothered to comply to the notices issued during the course of appellate proceedings. This shows that the appellant is not interested in pursuing its appeal. If the appellant

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opportunities given, they cannot allege contravention principles of natural justice without going to the facts of the case that even email of his counsel was registered on to the portal. 4. That the Ld. CIT (A) has erred in law for dismissing the appeal without waiting the result of appeal being filed by the assessee with the Jurisdictional Tribunal against the appellate order, which was passed ex-party on dated 16/05/2025 and only the issue was involved due to which the above penalty has been imposed. 5. That the appellant craves leave to add, alter, delete, rectify and modify any of the grounds of appeal before or at the time of hearing the appeal. 3.0 There was a delay of 63 days in filing of the appeal by the Assessee. The Assessee has filed an application dated 26.11.2025 for condonation of delay, which is reproduced as below:

“Sub: Delay condonation petition in the case of Mr. Hafiz Abdul Hakeem Memorial Trust, Penalty Order u/s 270A of the I.T. Act (PAN: AABTH7815F) for A.Y. 2019-20, regarding: Respected Sir, In this case, the appeal was filed before CIT(A) against the penalty order of Assessing Officer passed under section 270A of the I.T. Act dated 15.04.2021. The CIT(A) passed the order under section 250 dated 16.07.2025. There is delay of about 3½ months in filing of appeal before the Hon'ble Income Tax Appellate Tribunal for which the 'reasonable cause' is explained as under:

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1.

It is brought to your kind notice that the delay occurred in filing the appeal due to heart diseases, continuous fever, breathing problem and chronic bad health conditions of my Income Tax counsel Mr. Vishal Garg (FCA); in spite of best medication, he could not get improvement in his health conditions so as per advice of doctors he has to gone under various investigations such as blood testing, bone marrow and biopsy and result is that there is doubt of start of blood cancer to him due to which he is under heavy mental agony. Thereafter, various due dates of compliance for filing of ITRs and various audit reports but in spite of so crucial health condition, he has to make these various compliances, therefore, the above-mentioned appeal could not be filed within due time. In support of these facts the medical documents of Mr. Vishal Garg, are being enclosed. 2. In this case, delay in filing the appeal occurred due to bad health and mental agony of my counsel, which is a reasonable cause for condoning the delay in filing of the above appeal. Therefore, your honor is requested to kindly condone the delay of approx. 3½ months (as the appeal should be filed upto 16th September' 2025) and admit the appeal and decide the issue on its merit. Thanking You Yours Faithfully Sd/- Mohammad Usman President”

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4.0 Having carefully perused the application for condonation of delay, we find that there was sufficient cause for the delay in filing of the appeal. Accordingly, we condone the delay and admit this appeal for hearing.

5.0 None was present for the assessee when the appeal was called out for hearing. However, a Written Submission of Shri Peyush Kant, Advocate has been placed before us, stating therein that in the quantum proceedings, the Lucknow SMC Bench of the Tribunal vide its order dated 12.03.2026 in ITA No.892/LKW/2025 has set aside the order of the Ld. First Appellate Authority and restored the matter back to the file of the AO with the direction to pass de novo assessment order in accordance with law on issues in dispute after providing reasonable opportunity to the assessee and, therefore, the penalty imposed under section 270A of the Act cannot survive.

6.0 Per contra, the Ld. Sr. D.R., placing reliance on the order of the Ld. First Appellate Authority, submitted that the appeal of the assessee may be dismissed.

7.0 We have heard the Ld. Sr. D.R. and have also perused the material on record. We find that the order of the Ld. First Appellate Authority confirming the addition made by the AO has been set aside by the Co-ordinate Bench of this Tribunal vide

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order dated 12.03.2026 in ITA No.892/LKW/2025 and has been restored to the file of the AO with the direction to pass de novo assessment order in accordance with law on issues in dispute after providing reasonable opportunity to the assessee. 7.1 It is a well-settled principle of Income Tax law that penalty proceedings are consequential in nature and are inextricably linked to the assessment of quantum income. The foundation for the levy of penalty under section 270A of the Act is the determination of under-reported or misreported income in the assessment order. In the present case, since the Co-ordinate Bench of this Tribunal has already set aside the core additions and restored the issue back to the file of the Assessing Officer for a fresh assessment, the very foundation, on which the impugned penalty under section 270A of the Act was imposed, has ceased to exist at this stage. Consequently, the penalty order passed under section 270A cannot survive independently in the eyes of the law.

8.0 Since the quantum appeal has been remitted to the file of the AO by the Co-ordinate Bench of this Tribunal, the penalty appeal is also remitted to the file of the AO, to be decided afresh in accordance with law, based on the result to be arrived at by the AO in the quantum matter.

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9.0 In the final result, the appeal filed by the Assessee is allowed for statistical purposes. Order pronounced in the open Court on 08/07/2026.

Sd/- Sd/- [NIKHIL CHOUDHARY] [SUDHANSHU SRIVASTAVA] ACCOUNTANT MEMBER JUDICIAL MEMBER

DATED:08/07/2026 JJ:

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