KHUSHI BHADRICHA LEGAL HEIR OF GOVIND KABRA BHADRICHA,MUMBAI vs. DCIT 27(1), MUMBAI

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ITA 1425/MUM/2026Status: DisposedITAT Mumbai30 April 2026AY 2017-184 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the addition which formed the basis for the penalty levy was deleted by the co-ordinate bench, the penalty deserved to be set aside. The penalty was directed to be deleted as its foundation no longer existed.

What were the facts?

The Assessing Officer made additions for unexplained money and cash deposits. The CIT(A) deleted one addition but sustained another. The ITAT later deleted the sustained addition. Subsequently, a penalty was levied based on the addition that was ultimately deleted by the ITAT.

What were the issues?

Whether penalty under Section 271AAC(1) can be sustained when the addition forming its basis has been deleted by the Tribunal. The consequential effect of deletion of addition on penalty proceedings.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 271AAC(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI “E” BENCH : MUMBAI

Before: SHRI VIKRAM SINGH YADAV & SHRI SANDEEP SINGH KARHAIL

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “E” BENCH : MUMBAI

BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER

ITA No. 1425/Mum/2026 Assessment Year : 2017-18 Khushi Bhadricha Legal Heir of DCIT-27(1), Govind Kabra Bhadricha, Room No. 408, 4th Floor, Ground Floor, vs. Vashi Station Complex, Pujya Maa Nivas Kanji Sheth Vashi, Wadi, Maharashtra-400703. Ghatla Village, Chembur East, Chembur H.O Mumbai-400071. PAN : AGUPB1942J (Appellant) (Respondent) For Assessee : Shri Vimal Punmiya For Revenue : Shri Hemanshu Joshi, Sr.DR Date of Hearing : 28-04-2026 Date of Pronouncement : 30-04-2026 O R D E R PER VIKRAM SINGH YADAV, A.M : This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟], dated 13-01-2026, pertaining to Assessment Year (AY) 2017-18.

2.

Briefly, the facts of the case are that the assessment in this case was completed u/s. 143(3) of the Income Tax Act, 1961 („the Act‟), vide order

2 ITA No. 1425/Mum/2026

dt. 17-12-2019, wherein the AO has brought to tax sum of Rs. 7,11,344/- on account of un-explained money by way of clearing deposit and another addition of Rs. 59,94,000/- towards cash deposit u/s. 69A r.w.s. 115BBE of the Act. Separately penalty proceedings u/s. 271AAC(1) of the Act were initiated in respect of both the additions. The assessee thereafter carried the matter in appeal before the Ld.CIT(A), who has deleted the addition amounting to Rs. 7,11,344/-. However, the addition of Rs. 59,94,000/- was sustained. The assessee thereafter carried the matter in appeal before the Tribunal and the Co-ordinate Bench of the Tribunal vide its order dt. 21-05-2025 in ITA No. 4495/Mum/2023 has deleted the said addition. The AO has since given effect to the order of the Co-ordinate Bench of the Tribunal wherein the returned income has been accepted in terms of appellate effect order dt. 17-12-2025, therefore, as far as the quantum proceedings are concerned, the same had attained finality and returned income has been assessed.

3.

In the interim, after receipt of the appellate order passed by the Ld. CIT(A) and before receipt of the order by the Co-ordinate Bench of the Tribunal, the AO has proceeded and passed the penalty order, wherein he has levied penalty u/s. 271AAC(1) of the Act @10% in respect of addition amounting to Rs. 59,94,000/- which has since been sustained by the Ld.CIT(A). Against the said order, the assessee is in appeal before us.

4.

During the course of hearing, the Ld.AR submitted that in the quantum proceedings, addition had already been deleted by the Co- ordinate Bench of the Tribunal and, therefore, in absence of the addition u/s. 69A of the Act, consequent levy of penalty be set aside and the same be directed to be deleted.

3 ITA No. 1425/Mum/2026

5.

Per contra, the Ld.DR is heard, who has relied on the orders passed by the lower authorities. At the same time, it was fairly submitted that the addition which was the subject matter of the levy of penalty has since been deleted by the Co-ordinate Bench of the Tribunal vide its order dt. 21-05- 2025.

6.

After hearing both the parties and considering the material available on record. Admittedly, the addition which was the subject matter of levy of penalty has since been deleted by the Co-ordinate Bench of the Tribunal and taking the same into consideration, the AO has passed the appeal effect order wherein the returned income has been accepted. Therefore, we agree with the contentions so advanced by the Ld.AR that where the very foundation for levy of penalty no more exists, the penalty so levied deserves to be set- aside. We accordingly allow the grounds of appeal raised by the assessee and direct the AO to delete the penalty so levied u/s. 271AAC(1) of the Act.

7.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open court on 30-04-2026

Sd/- Sd/- [SANDEEP SINGH KARHAIL] [VIKRAM SINGH YADAV] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 30-04-2026 TNMM

4 ITA No. 1425/Mum/2026

Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file

By Order

Dy./Asst. Registrar I.T.A.T, Mumbai

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