IMAGE NIRMAN PVT. LTD.,,KOLKATA vs. ITO, WARD 11(4),, KOLKATA

For that the Orders passed by the lower authorities are arbitrary, erroneous, without proper reasons, invalid and bad-in-law, to the extent to which they are prejudicial to the interests of the appellant.

For that the Ld. CIT (A), NFAC erred in confirming the penalty of Rs.3,58,246/- levied u/s 271(1)(c) of the Income Tax Act, 1961 is totally wrong and uncalled for.

For that the Ld. CIT (A), NFAC failed to appreciate the facts of the instant case and confirm the levy of penalty u/s 271(1)(c) of the Act in as much as ITA No(s). 2963/KOL/2025 Assessment Year(s) 2014-15 that there being no element of concealment of income or furnishing of inaccurate particulars of income by the appellant.

For that the Ld. CIT (A), NFAC failed to appreciate the fact that the Notice of penalty issued was defective as the A.O. did not specify the charge for which the penalty is being levied and the same in turn renders the penalty Order bad-in-law, liable to be annulled.

For that the appellant craves leave to amend, alter, modify, substitute, add to, abridge and/or rescind any or all of the above Grounds."

Brief facts of the case are that the assessee had filed the return of income for AY 2014-15 on 22.09.2014 declaring total loss of ₹22,048/- . During the course of the assessment proceedings, the Assessing Officer (hereinafter referred to as Ld. 'AO') examined a suspicious transaction in a penny stock (Shreenath Commercial & Finance Ltd.) where the assessee had claimed short-term capital loss on the sale of 60,000 shares amounting to ₹11,90,580/-. The Ld. AO concluded that the transaction was manufactured, managed, and manipulated to create a bogus loss in connivance with a syndicate of entry operators and brokers, and disallowed the claimed loss and added it to the income of the assessee and assessed the total income of the assessee at ₹8,89,933/- vide order u/s 143(3) of the Act dated 29.12.2016. Subsequently, in the course of the penalty proceedings, as no compliance was made by the assessee, despite the opportunity of being heard provided, he concluded vide order u/s 271(1)(c) of the Act dated 24.09.2019 that the assessee had furnished inaccurate particulars of income regarding the bogus loss on penny stocks and levied a penalty of ₹3,58,246/-, being 100% of the tax sought to be evaded. Aggrieved by the penalty order, the assessee filed an appeal before the Ld. CIT(A). During the appellate proceedings, despite the issuance of multiple hearing notices spanning over three years, the assessee persistently Assessment Year(s) 2014-15 failed to appear, submit relevant documents, or file written submissions to support the grounds of appeal. The Ld. CIT(A) noted that the assessee was entirely non-cooperative and showed a lack of interest in prosecuting the appeal and decided the appeal ex parte. He observed that the assessee had failed to discharge the obligation to prove with supporting documents that the penalty was unjustifiably levied and confirmed the action of the Ld. AO and dismissed the appeal of the assessee.

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. The Ld. AR submitted that the original assessment order was pending before the Ld. CIT(A) as the appeal order of the Ld. CIT(A) was set aside by the ITAT vide order in ITA No. 2306/Kol/2019 for A.Y. 2014-15 dated 29.01.2020 which is still pending for adjudication. He requested to set aside the appeal order of the Ld. CIT(A) passed against the penalty order for deciding after considering the outcome of the quantum appeal.

The Ld. DR submitted that the original assessment was confirmed, penalty was imposed and the appeal was dismissed due to non-compliance.

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)/ITAT. After examining the facts of the case and the law, we deem it appropriate to set aside the order of the Ld. CIT(A) and restore the appeal to him to decide afresh after considering the outcome of the ITA No(s). 2963/KOL/2025 Assessment Year(s) 2014-15 pending quantum appeal against the assessment order, which has been restored to him as contended by the Ld. AR. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments and rule 46A of the I.T. Rules, 1962 shall also be followed and an opportunity of being heard may be provided to the Ld. AO, if required. Accordingly, the grounds taken by the assessee in the appeal are partly allowed for statistical purposes.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 22nd June, 2026. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 22.06.2026 Bidhan (Sr. P.S.)

CIT-

CIT(DR), Kolkata Benches, Kolkata.

Guard File. //// By order