M/S. AAKARSHAN MERCHANTS PVT. LTD.,KOLKATA vs. I.T.O., WARD - 13(1),, KOLKATA

For that the Ld. CIT(A) erred in confirming the order of the AO in which penalty u/s 271(1)(c) was imposed when the appellant duly submitted time to time during the course of penalty proceedings that the original assessment order on which the penalty was imposed is pending before the Hon'ble ITAT Kolkata "A" Bench bearing Appeal number ITA/1814/KOL/2024 as the appellant duly filed appeal against the original assessment order before the Ld. Bench.

For that on the facts and circumstances of the case, the Ld. CIT(A) has not given a proper opportunity of being heard and also erred in rejecting the valid submission made by the appellant that the original assessment on which penalty was imposed is sub-judice.

For that on the facts and circumstances of the case. The Ld. CIT(A) erred in conforming the order of the AO in imposing penalty of Rs. 1,37,24,619/- which was unjustified and not in accordance with law."

Brief facts of the case are that the assessee had filed the return of income for AY 2013-14 on 04.12.2013 declaring the total income of ₹24,870/-. Subsequently, the case was reopened u/s 147 of the Act on the basis of information received from the Investigation Wing regarding suspicious round-figure credits in the bank account of the assessee amounting to ₹4,75,08,029/- which were transferred out immediately. During the reassessment proceedings, the Assessing Officer (hereinafter referred to as Ld. 'AO') sought details and documentary evidence to verify the nature and source of these transactions but since the explanation and documents were insufficient to establish the creditworthiness of the parties advancing the loans, the Ld. AO made the addition of ₹4,23,00,000/- u/s 68 of the Act as unexplained cash credits. The Ld. AO computed the total income of the assessee at ₹4,23,24,870/- in the assessment order passed u/s 147 r.w.s. 144B of the Act dated 30.03.2022. Consequently, the Ld. AO initiated penalty proceedings u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income. The assessee requested that the penalty proceedings be kept in abeyance as an appeal against the quantum addition was pending before the ITAT. However, observing that the Ld. CIT(A) had already dismissed the quantum appeal of the assessee and confirmed the addition u/s 68 of the Act, the Ld. AO held that the assessee had wilfully concealed income and furnished inaccurate particulars and there was no legally valid bar to levy the penalty.

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

Rival contentions were heard and the submissions made have been examined. It was submitted by the Ld. AR, at the outset that the assessee had filed an appeal before the Tribunal against the assessment order confirmed by the Ld. CIT(A) and the Tribunal had held that the notice under section 143(2) of the Act was issued beyond the limitation period and both the notice as well as the assessment framed were invalid and were quashed vide order dated 20/01/2026 in ITA No.

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). Since the appeal against the assessment order was pending before the Tribunal, the appeal against the penalty order could have been kept in abeyance by the appellate authority till the decision of the Tribunal in the quantum appeal. Since the assessment order has been quashed by the Tribunal, the very basis for the imposition of penalty does not survive. Hence, the order of the Ld. CIT(A) confirming the penalty is hereby set aside and the penalty imposed is also quashed and the grounds of appeal are allowed.

In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 6th July, 2026. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 06.07.2026 Bidhan (Sr. P.S.)

CIT-

CIT(DR), Kolkata Benches, Kolkata.

Guard File. //// By order