DCIT-2 1 1 MUMBAI, MUMBAI vs. ECLERX SERVICES LIMITED, MUMBAI

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ITA 3068/MUM/2026Status: DisposedITAT Mumbai15 June 2026AY 2014-154 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that once the underlying addition forming the basis of the penalty is deleted, the penalty proceedings automatically collapse. The pendency of a further appeal by the Revenue does not negate the binding effect of the Tribunal's order.

What were the facts?

The Revenue appealed against the deletion of penalty under section 271(1)(c) by the CIT(A). The penalty was levied on a transfer pricing adjustment which was subsequently deleted by the ITAT.

What were the issues?

Whether penalty under section 271(1)(c) can be sustained when the underlying addition has been deleted by the Tribunal, despite the Revenue filing a further appeal.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘E’ BENCH

For Appellant: Shri Niraj Sheth
For Respondent: Shri Hemanshu Joshi
Hearing: 09/06/2026Pronounced: 15/06/2026

आदेश / O R D E R PER AMIT SHUKLA (J.M):

The aforesaid appeal has been preferred by the Revenue against the order dated 13.01.2026 passed by the learned Commissioner of Income Tax (Appeals)-56, Mumbai, arising out of penalty proceedings initiated under section 271(1)(c) of the Income Tax Act, 1961 for the Assessment Year 2014-15.

2.

The Revenue has raised the following grounds of appeal:

2 ITA No.3068/Mum/2026 Eclerx Services Limited

“1. On the facts and in law, the Ld. CIT(A) erred in directing the Assessing Officer to reduce/delete the penalty levied under section 271(1)(c) without appreciating that the order of the Hon’ble ITAT dated 02.05.2023 deleting the quantum addition has not been accepted by the Department and further appeal has been preferred before the Hon’ble High Court. 2. The appellant craves leave to add, amend, alter and/or delete any of the grounds of appeal.”

3.

We have heard the learned representatives of both the parties and perused the material available on record. The undisputed factual position emerging from the record is that the impugned penalty under section 271(1)(c) was levied with reference to a transfer pricing adjustment amounting to Rs.7,63,00,000/-. It is also an admitted position that the very quantum addition forming the sole foundation for initiation and levy of the impugned penalty stood deleted by the Coordinate Bench of the Tribunal vide order dated 02.05.2023 passed in ITA Nos.2046/Mum/2019 and 5581/Mum/2019. Consequent thereto, the Assessing Officer himself passed an order giving effect dated 08.04.2024 whereby the said transfer pricing adjustment was deleted in conformity with the directions of the Tribunal.

3.1. Once the very addition on the basis of which penalty had been imposed no longer survives, the edifice of the penalty proceedings automatically collapses. The learned CIT(A), therefore, rightly held that in the absence of the underlying addition, no penalty under section 271(1)(c) could be sustained. The only grievance raised by the Revenue is that the Department has not accepted the order of

3 ITA No.3068/Mum/2026 Eclerx Services Limited the Tribunal and has preferred a further appeal before the Hon’ble High Court. In our considered opinion, such a contention does not advance the Revenue’s case. Mere filing or pendency of an appeal before a higher forum does not dilute or obliterate the binding force and operative effect of the order passed by the Tribunal, particularly when no material has been brought on record to demonstrate that the operation of the Tribunal’s order has been stayed or suspended by any competent judicial forum. As on date, the quantum addition stands deleted and the consequential effect has already been given by the Assessing Officer himself. Therefore, there remains no surviving basis on which penalty under section 271(1)(c) can be independently sustained.

3.2. Accordingly, finding no infirmity in the order of the learned CIT(A), we uphold the same and dismiss the grounds raised by the Revenue.

4.

In the result, the appeal of the Revenue stands dismissed.

Order pronounced on 15th June, 2026.

Sd/- Sd/- (GIRISH AGRAWAL) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 15/06/2026 KARUNA, sr.ps

4 ITA No.3068/Mum/2026 Eclerx Services Limited

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER,

(Asstt. Registrar) ITAT, Mumbai

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