ACIT, DELHI vs. RAJESH GOYAL, DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”, DELHI

BEFORE SH. SUDHIR KUMAR JUDICIAL MEMBER AND SH. NAVEEN CHANDRA, ACCOUNTANT MEMBER

ITA No.1368/DEL/2026 Assessment Year: 2011-12 ACIT Vs. Rajesh Goyal Second Floor CR Building 32,Ist Floor Road No.43 IP Estate New Delhi 110002 Punjabi Bagh Ashoka Park Extn, New Delhi PAN NO. AALPG2490F (APPELLANT) (RESPONDENT)

Appellant by Ms. Sita Shrivastava, CIT (DR) Respondent by Sh. Salil Agarwal, Sr. Adv. Date of hearing: 04/06/2026 Date of Pronouncement: 24/06/2026 ORDER PER SUDHIR KUMAR, JUDICIAL MEMBER:

This appeal by the Revenue is directed against the order of the National Faceless Appeal Centre (NFAC) Delhi [hereinafter referred to as “Ld. NFAC)”] vide order dated 27-12-2025 pertaining to A.Y. 2011-12 arising out the penalty order dated 21-03-2022 passed under section 271(1) (C) of the Income -tax Act (in short “the Act”) 2. The Revenue raised the following grounds in the appeal:

M/s Shree Securities Limited. As per the Kolkata Wing of Investigation the Shree Securities Limited was an accommodation entry provider company. The Assessing Officer completed the assessment after making the additions of Rs.14,97,39,733/- and penalty proceedings under section 271(1) ( c) of the Act were initiated. A notice under section 271(1) (c) of the Act was issued on 24-12- 2018 to the assessee. The Assessing Officer held that the assessee had furnished inaccurate particulars of income by making a false claim of exempt LTCG, and accordingly, levied minimum penalty of Rs.4,61,19,197/-. 4. Aggrieved the order of the ld. Assessing Officer the assessee preferred the appeal before the Ld. NFAC who vide his order dated 27-12-2025 allowed the appeal of the assessee. Being aggrieved the order the Revenue is in appeal before us. The Ld. CIT(A) has observed in his order as under: 5.4 It is undisputed fact that the Hon’ble ITAT Delhi Bench, vide order dated 28-05-2024 has quashed the reassessment proceedings u/s 147/148 after holding that; The reopening was based solely on Investigation Wing information There was no tangible material before the Assessing Officer

There was no failure on the part of the assessee to disclose fully and truly all material facts The reopening was vitiated due to lack f application of mind 5.5 Consequently the same reassessment order forming the basis of penalty proceedings stands annulled. It is a settled position of law that when the quantum addition does not survive, the penalty imposed thereon automatically collapses. Reliance is placed on the following decisions: K. C. Builders v. ACIT (265ITR562) (SC) CIT v. Reliance Petroproducts Pvt. Ltd. (32 ITR158)(SC) Accordingly, the penalty levied u/s 271(1) (c) cannot be sustained. 5.6 Further on perusal of the show cause notice issued u/s 274 r.w.s. 271(1) (c), it is observed that the AO has failed to specify the exact limb under which penalty was proposed, i.e. whether for: Concealment of income or Furnishing of inaccurate particulars of income Such a notice has ben held to be invalid by various courts. Reliance is placed on: CIT v. Manjunatha Cotton & Ginning Factory (359 ITR 565) (KAR.) CIT V. SSA”S Emerald Meadows (SC) On the ground alone the penalty proceedings are liable to be quashed. 5.7 Further, it is noted that the assessee had disclosed complete details of purchase and sale of shares. All supporting evidences

such as demat statement, contract notes bank statements and SIT payments were filed. The Claim of exemption u/s 10(38) was made on the basis of facts and prevailing law. Mere rejection of a claim does not amount to furnishing inaccurate particulars of income. 5.8 In view of the above discussion and respectfully following the binding order of the Hon’ble ITAT, it is held that the penalty levied u/s 271(1) (c) is unsustainable in law, the show cause notice itself is invalid, there is no concealment or furnishing of inaccurate particulars of income. The penalty of Rs.4,61,19,197/- levied u/s 271(1) (c) is hereby deleted. The appeal of the appellant is allowed. 5. The Ld. DR submitted that Assessing Officer had specifically mentioned that the penalty was proposed for furnishing Inaccurate particulars of income. He further submitted that the Assessing Officer also mentioned that the assessee has committed a default of furnishing inaccurate particulars of Income. He also submitted that the LTCG claimed by the assessee on sale of shares of M/s Shree Securities Ltd. was accommodation entry in nature. 6. Ld. Counsel for the assessee has submitted that the reassessment order has been quashed by the Hon’ble ITAT vide order dated 28-05-2024. If the reassessment was quashed then penalty cannot be survived. He further stated

that the Ld. CIT(A) has rightly allowed the appeal of the assessee. 7. We have heard the parties and perused the record. In the

case in hand the reassessment order has been quashed by

the Hon’ble ITAT vide order dated 28-05-2024. If the

reassessment was quashed then penalty cannot be

survived. The Ld. CIT(A) has rightly held that when the

quantum addition does not survive, the penalty imposed

thereon automatically collapses.

limb under which penalty was proposed. The Ld. CIT(A) also

set aside the penalty order on this ground. The Ld. CIT(A)

has examined these issues in the correct perspective and

rightly deleted the penalty levied by the Assessing Officer.

We do not find any reasons to interfere with the findings of

the Ld. CIT(A). The appeal of the Revenue is liable to be

dismissed.

Order pronounced in the open court 24.06.2026.

Sd/- Sd/-

(NAVEEN CHANDRA) (SUDHIR KUMAR) ACCOUNTANT MEMBER (JUDICIAL MEMBER) SR BHATNAGGAR Date: 24.06.2026 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) ` 5. DR: ITAT ASSISTANT REGISTRAR ITAT DELHI