GANDAVARAPU SATHYANARAYANA REDDY,CHENNAI vs. THE INCOME TAX OFFICER, NON CORP WARD 8(2), CHENNAI, CHENNAI

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ITA 55/CHNY/2026Status: DisposedITAT Chennai19 June 2026AY 2012-133 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty order, being consequential to the assessment, should also be restored to the AO for de novo proceedings. The assessee was directed to cooperate with the AO.

What were the facts?

The assessee's appeal before the CIT(A) was dismissed due to a delay. The ITAT had previously restored the quantum assessment to the AO for de novo assessment. The penalty order was consequential to the assessment.

What were the issues?

Whether a consequential penalty order can be sustained when the underlying assessment is set aside for de novo assessment. Whether the CIT(A) erred in dismissing the appeal on delay without considering principles of natural justice.

Which sections of the Income-tax Act were involved?

Section 144,Section 147,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: HONOURABLE SHRI ABY T. VARKEY & SHRI GAGAN GOYAL

Hearing: 11.06.2026Pronounced: 19.06.2026

आयकर अपीलीय अधिकरण ‘सी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI माननीय श्री एबी टी. वर्की, न्याययक सदस्य एवं श्री गगन गोयल लेखा सदस्य के समक्ष BEFORE HONOURABLE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 55/Chny/2026 ननिाारण वर्ा /Assessment Years: 2012-13 Gandavarapu Sathyanarayana Reddy, v. The Income Tax Officer, Flat No.B-1, Plot No.258, Rajiv Nagar, Non-Corp Ward-8(2), Pillaiyar Koil Street Extn., Pallikuppam, Chennai. Ayyapakkam, Chennai-600 077. [PAN: AQMPR4401J] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. R. S. Lakshmi Narayana, Advocate, Ld. AR प्रत्यर्थी की ओर से /Revenue by : Mr. Guru Prasad, Addl. CIT, Ld. DR सुनवाईकीतारीख/Date of Hearing : 11.06.2026 घोषणाकीतारीख /Date of Pronouncement : 19.06.2026 आदेश / O R D E R PER GAGAN GOYAL, AM: This is an appeal preferred by the assessee against the order of Ld. Commissioner of Income Tax (A) / NFAC, (hereinafter referred as the ‘Ld. CIT(A)’) dated 15.12.2025, for the Assessment Year (hereinafter referred as the ‘AY’) 2012-13.

GROUNDS OF APPEAL

1.

That the Learned Commissioner of Income-tax (Appeals), NFAC, Delhi ("Ld. CIT(A)") is not justified in dismissing the appellant's appeal without either condoning the delay or providing a fair opportunity for the appellant to be heard, thus violating the principles of natural justice. 2. That the Ld. CIT(A) ought to have quashed the penalty in light of the fact that the assessment had been set aside and remanded to the Assessing Officer for a de novo assessment, as directed by the Hon'ble Income Tax Appellate Tribunal, Chennai, in ITA No.2028/Chny/2025.

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ITA No.55/Chny/2026 (2012-13) Gandavarapu Sathyanarayana Reddy 3. That the Ld. CIT (A) erred in dismissing the appeal, failing to appreciate that in the absence of an assessment, the imposition of a penalty is legally unsustainable. Without prejudice to the above, the following grounds of appeal are raised: 4. That the Ld. CIT (A) erred in confirming the levy of penalty of Rs. 12, 01,206/-u/s.271 (1) (c) of the Act. 5. That the appellant respectfully reserves the right to add, modify, alter, or withdraw any of the above grounds of appeal at the time of hearing. 2. The brief facts of the care are, the assessment in this case for AY-2012-13 was completed u/s. 144 r.w.s. 147 of the Income Tax Act, 1961 on 10.12.2019 at an assessed income of Rs. 43, 80, 730/-. While completing the assessment proceedings the AO has made an addition of Rs. 43, 80, 730/- on account of unexplained investment in bank account of the assessee being cash deposits made amounting to Rs. 17, 61, 000/- and also incurred payment of Rs. 26, 19, 630/- towards credit card bills being unexplained expenditure during the year under consideration. Penalty proceedings were initiated u/s. 271 (1) (c) of the Income Tax Act and penalty of Rs. 12, 01, 206/- was levied. The assessee being aggrieved with the order of AO passed u/s. 144 r.w.s. 147 of the Act, preferred an appeal before the Ld. CIT (A) who in turn dismissed the appeal of the assessee on the ground of delay of 295 days in filing the appeal. The assessee being further aggrieved, preferred an appeal before this tribunal vide ITA No.2028/Chny/2025 and vide order dated 18.09.2025 this tribunal restored the matter back to the file of AO for de novo assessment on merits.

3.

As far as penalty order is concerned that was also passed consequentially u/s. 271(1) (c ) of the Act vide order dated 19.11.2024 and same sequence followed here also as mentioned (supra) in the case of quantum additions. Now, it is placed on record by the Ld. AR that the matter has been restored for de novo assessment and this penalty order is consequential, without commenting on the merits of the case, this matter is also restored back to the file of the AO for de novo proceedings based on the outcomes of quantum assessment as mentioned (supra).

4.

The assessee is directed to be vigilant and cooperative in the proceedings before the AO without fail and seeking any adjournment. The AO is directed to

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ITA No.55/Chny/2026 (2012-13) Gandavarapu Sathyanarayana Reddy proceed as per law and to follow the outcome of the assessment proceedings as discussed (supra) while finalizing the impugned penalty order.

5.

In the result, the appeal of the assessee is allowed for statistical purposes with the above directions. Order pronounced on the 19th day of June, 2026, in Chennai.

Sd/- Sd/- (एबी टी. वर्की) (गगन गोयल) (ABY T. VARKEY) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated: 19th June, 2026. KB आदेश की प्रयतललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem 4. पवभागीय प्रयतयनधि/DR K 5. गार्ड फाईल/GF Digitally signed by K BABU BABU Date: 2026.06.30 09:03:08 +05'30'

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