ACIT CIRCLE 3(2)(1), MUMBAI, MUMBAI vs. THE NEW INDIA ASSURANCE CO LIMITED, MUMBAI

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ITA 1475/MUM/2026Status: DisposedITAT Mumbai30 April 2026AY 2016-173 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 since the addition based on which the penalty was imposed had been deleted by the ITAT in a further appeal, the penalty had no basis. Therefore, the deletion of the penalty by the First Appellate Authority was upheld.

What were the facts?

The Assessing Officer made an addition of Rs. 361,14,71,484/- to the assessee's income for disallowance of expenses to auto dealers for failure to deduct tax at source. Based on this addition, a penalty was imposed under Section 271(1)(c).

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the underlying addition has been deleted by the Tribunal. The validity of penalty imposed for furnishing inaccurate particulars of income.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 40(a)(ia),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI

Before: Shri Saktijit Dey, Hon’ble Vice- & Shri Prabhash Shankar, Hon’ble

For Appellant: Shri Vikas K Suryawanshi CIT DR
For Respondent: Shri Farrokh V.Irani,Sr.Adv
Hearing: 28.04.2026Pronounced: 30.04.2026

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “B”, MUMBAI Before Shri Saktijit Dey, Hon’ble Vice-President & Shri Prabhash Shankar, Hon’ble Accountant Member ITA 1475/MUM/2026 (Assessment Year: 2016-17) ACIT Circle 3(2)(1), Mumbai The New India Assurance Co Ltd Vs. 87, New India Assurance Bldg, M.G. Road , Mumbai G.P.O. Mumbai -400001 PAN AAACN4165C (Appellant) (Respondent) Appellant By : Shri Vikas K Suryawanshi CIT DR Respondent By : Shri Farrokh V.Irani,Sr.Adv

Date of Hearing :28.04.2026 Date of Pronouncement : 30.04.2026

O R D E R Per Saktijit Dey, Vice-President

Present appeal by Revenue arises out of order dated 11.12.2025 passed by National Faceless Appeal Centre, Delhi (NFAC), deleting the penalty imposed u/s 271(1)(c) of the Income Tax Act, 1961 (‘Act’ for short) pertaining to A.Y 2016-17.

2.

We have considered the rival submissions and perused the materials on record. Briefly stated, the assessee, a resident corporate entity, filed its Return of Income for the relevant assessment year on 29.11.2016 declaring loss of

2 ITA 1475/MUM/2026 The New India Assurance Co Limited 791,73,95,016/- under the normal provisions of the Act and book profit of Rs 468,14,61,699/- u/s 115JB of the Act. Assessee’s case was selected for scrutiny and while completing the assessment vide order dated 29.12.2018 u/s 143(3) of the Act, the Assessing Officer (AO) made various additions; one amongst them being disallowance of expenses made to auto dealers amounting to Rs.361,14,71,484/- The aforesaid disallowance was made u/s 40(a)(ia) of the Act alleging that assessee had failed to deduct tax at source. The aforesaid disallowance so made was also confirmed by the learned First Appellate Authority. Based on such disallowance, the AO initiated proceedings for imposition of penalty u/s 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income and, ultimately, passed an order on 19.03.2025 imposing penalty of 124,98,58,050/-. Against the penalty so imposed, the assessee preferred appeal before the First Appellate Authority. Taking note of the fact that while deciding the issue in further appeal, ITAT has deleted the subject disallowance made u/s 40(a)(ia) of the Act, learned First Appellate Authority deleted the penalty imposed u/s 271(1)(c) of the Act.

3.

Before us, the learned counsel appearing for the assessee submitted that the addition based on which the penalty has been imposed has been deleted by the Tribunal. The learned DR without controverting such factual position submitted that the Department has preferred an appeal against the decision of ITAT deleting the disallowance. Be that as it may, the fact remains that the

3 ITA 1475/MUM/2026 The New India Assurance Co Limited disallowance based on which the penalty u/s 271(1)(c) of the Act was imposed, no more survives by virtue of the decision of the Tribunal. That being the factual position emerging on record, the penalty imposed u/s 271(1)(c) of the Act has no legs to stand. Therefore, in our considered opinion, learned First Appellate Authority has rightfully deleted the penalty imposed. The grounds are dismissed.

4.

In the result, the appeal is dismissed. Order pronounced in the open court on 30th April, 2026

Sd/- Sd/- (Prabhash Shankar) (Saktijit Dey) ACCOUNTANT MEMBER VICE-PRESIDENT Mumbai, Dated : 30th April, 2026 SA Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The CIT(A), Mumbai. 4. The PCIT, Mumbai. 5. The DR, ‘B’ Bench, ITAT, Mumbai BY ORDER

//True Copy// (Assistant Registrar) Income Tax Appellate Tribunal, Mumbai

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