DHARM CHAND SAINI,JAIPUR vs. ITO WD 4(2),JPR, JAIPUR

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ITA 1899/JPR/2025Status: DisposedITAT Jaipur30 June 2026AY 2018-194 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessment order was invalid because no addition was made on the grounds for reopening. Consequently, a penalty under Section 270A could not be levied based on an invalid assessment order.

What were the facts?

The assessee's return of income was initially considered invalid. The Assessing Officer (AO) reopened the assessment based on unexplained cash deposits, but later accepted the assessee's explanation for these deposits, making no addition to the income. Despite this, a penalty under Section 270A was levied.

What were the issues?

Whether a penalty under Section 270A can be levied when the assessment order is invalid due to no additions being made on the basis of reopening. Whether the Ld. CIT(A) violated principles of natural justice by dismissing the appeal for non-prosecution without adjudicating on merits.

Which sections of the Income-tax Act were involved?

Section 270A,Section 147,Section 250(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES, “SMC” BENCH, JAIPUR

Before: SMT. ANNAPURNA GUPTA

Hearing: 23.06.2026Pronounced: 30.06.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No. 1899/JPR/2025 (Assessment Year:2018-19)

Dharm Chand Saini Vs. ITO G-4 Lalpuriya Ganga Ward 4(2) Apartment Vidhyadhar Jaipur Nagar, Sector 2 Jaipur �थायीलेखासं./जीआइआरसं./PAN/GIR No:AGXPS 0650 H Appellant .. Respondent

Appellant by : Sh. Rahul Kr. Gupta, CA Respondent by : Mrs. Aarti Rawat, Addl. CIT

Date of Hearing 23.06.2026 Date of Pronouncement 30.06.2026 O R D E R The present appeal has been filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “Ld. CIT(A)”), confirming the levy of penalty under Section 270A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). 2. The grounds of appeal raised by the assessee read as under:- 01. That the order passed by the Ld. CIT(A) is bad in law and on facts, having been passed without proper adjudication of the grounds on merits and in violation of principles of Natural justice.

P a g e | 2 ITA No. 1899/JPR/2025 Dharm Chand Saini

2.

That the Ld. CIT(A) has violated the mandatory provisions of section 250(6) of the Income Tax Act, 1961 by dismissing the appeal for non-prosecution without adjudicating the issues on merits, rendering the impugned order unsustainable in law. 03. That the Ld. CIT(A) has erred in law and on facts in ignoring the Self-Assessment Tax of Rs.89,480/- paid by the appellant on 31-08-2018 (tax Rs.84,418/- and interest Rs.5,064/-) and in levying penalty at 200% of tax amounting to Rs.1,68,832/-, which is unjustified, bad in law, and liable to be deleted. 04. That the Ld. CIT(A) has erred in law in confirming the penalty levied u/s 270A despite the fact that the returned income was accepted by the AO without any addition. 05. That the penalty levied u/s 270A is arbitrary, excessive and unsustainable in law, and deserves to be deleted in full. 06. That the appellant deserves the right to add, alter or modify any of the above grounds on or before the date of hearing. 3. The appeal is delayed for filing by 24 days. Considering the smallness of the delay the same is condoned. Order was pronounced in the open Court. 4. I have heard both the parties and I have also gone through the orders of Authorities below. I have noted that penalty u/s 270A of the Act was levied on the addition made in assessment made u/s 147 of the Act for the impugned Assessment Year i.e. AY 2018-19. The facts reveal that the assessee had filed his return of income declaring income of Rs.5,23,190/-, but the same was found to be invalid. Assessment u/s 147 of the Act was framed on the income declared by the assessee in his said return. 5. I have also noted that reopening was resorted to for the reason that, the assessee was found to have made huge cash deposits of Rs.28 lacs in his Bank account, the source of which remained unexplained.

P a g e | 3 ITA No. 1899/JPR/2025 Dharm Chand Saini However, the assessment order reveals that, during assessment proceedings, the assessee’s explanation with regard to the source of the same was accepted and the entire cash deposits treated as from explained sources. 6. Penalty u/s 270A of the Act ,for misreporting/underreporting of income was initiated since the income assessed of Rs.5,23,190/- had not been duly disclosed in the return filed by the assessee. 7. It is evident therefore, that in the reassessment made on the assessee, no addition was made on the income which the AO found to have escaped assessment. I have noted that the AO was aware of the fact that the assessee had filed return of income declaring income of Rs.5,23,190/- but the same was treated an invalid return of income. However, while reopening the case of the assessee, the belief of escapement of income was not with respect to the income which the assessee had not disclosed by way of a valid return of income filed but it was only with respect to the cash deposits in his bank account. Therefore, when no addition was made on account of the cash deposits in his bank account, the AO had lost his jurisdiction to frame assessment on the assessee and accordingly, the assessment order passed in the present case, I hold was invalid. I draw support in this regard from the decision of the Hon’ble Delhi High Court in the case of CIT vs Ranbaxy Laboratories 336 ITR 136 (Delhi) and the Hon’ble Bombay High Court in the case of CIT vs Jet airways Ltd 331 ITR 236 (Bom).

P a g e | 4 ITA No. 1899/JPR/2025 Dharm Chand Saini 8. Having found the assessment order to be invalid and void ab initio, I hold therefore that no penalty u/s 270A of the Act could be levied on the assessee on account of “underreporting/misreporting of income” on the basis of an invalid assessment order. An order passed without jurisdiction is a nullity and confers no legal rights. 9. In view of the same, I direct deletion of the penalty levied in the facts of the present case amounting to Rs.1,68,832/-. 10. In the result, the appeal of the assessee stands allowed in above terms. Order pronounced in the open court on 30.06.2026.

Sd/- (Annapurna Gupta) ACCOUNTANT MEMBER Dated 30.06.2026 Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order, Asst. Registrar ITAT, Jaipur

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