AYESHA PARK ,NA vs. ARIVS.INCOME TAX OFFICER, WARD-1, , NAVSARI

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ITA 134/SRT/2026Status: DisposedITAT Surat19 June 2026AY 2017-184 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the penalty is consequential to the quantum proceeding. Since the quantum proceeding has been restored to the AO and has not attained finality, the penalty matter should also be restored to the AO for fresh adjudication after the quantum proceeding is concluded.

What were the facts?

The assessee's assessment for AY 2017-18 included an addition of Rs. 68,91,300/- on account of unexplained investment in an immovable property. This quantum proceeding was restored to the AO for fresh adjudication. Simultaneously, a penalty was levied under Section 271AAC(1) based on this addition.

What were the issues?

Whether a penalty levied under Section 271AAC(1) can be sustained when the underlying assessment addition has been restored to the Assessing Officer for fresh adjudication and has not attained finality.

Which sections of the Income-tax Act were involved?

Section 271AAC(1),Section 69

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT ‘DB’ BENCH, SURAT

For Appellant: Shri Sujesh C. Suratwala, CA
For Respondent: Shri Ashish Kumar, Sr. D.R
Hearing: 08/06/2026Pronounced: 19/06/2026

आदेश / O R D E R Per B.M. Biyani, A.M.: Feeling aggrieved by the order of first-appeal dated 11.12.2025 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“Ld. CIT(A)”], which in turn arises out of the penalty-order dated 23.09.2022 passed by learned ITO-Ward-(1), Navsari [“Ld. AO”] u/s 271AAC(1) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal on the grounds mentioned in Appeal Memo (Form No. 36).

2.

The background facts leading to present appeal are as under:

(i) The assessee-firm’s assessment was completed by Ld. AO vide assessment-order dated 31.03.2022 u/s 147 r.w.s. 144 after making an addition of Rs. 68,91,300/- on account of unexplained investment in an immovable property u/s 69 [“quantum-proceeding”]. The assessee filed appeal challenging the addition made in assessment- order and the matter ultimately travelled to the ITAT, Surat Bench in ITA No. 576/SRT/2025. The Co-ordinate bench of the ITAT, Surat, vide order dated 17.12.2025, restored the matter to the file of Ld. CIT(A) for adjudication afresh on merit. Pursuant to the ITAT’s order, the Ld. CIT(A) resumed the appellate proceeding and, vide his order dated 22.05.2026, set aside the assessment-order and restored the matter to the file of Ld. AO for framing a fresh assessment. Accordingly, the quantum-proceeding presently stands restored at the level of Ld. AO for a fresh adjudication and has not yet attained finality.

(ii) Simultaneous with assessment, the Ld. AO also initiated proceeding u/s 271AAC(1) for imposition of penalty qua the aforesaid addition made and ultimately passed penalty-order dated 23.09.2022 imposing a penalty of Rs. 5,32,352/-. Aggrieved by penalty-order, the assessee filed appeal to Ld. CIT(A) but did not get any success. Now, the assessee has come in present appeal challenging the levy of penalty.

3.

We have heard learned Representatives of both sides and carefully perused the case record.

4.

Before us, the learned Representatives of both sides were ad idem that the impugned penalty levied u/s 271AAC(1) is consequential to and dependent upon the outcome of the quantum-proceedings. Since the quantum-proceeding presently stands restored to the file of the Ld. AO for a fresh adjudication and has not yet attained finality, it was agreed that the present penalty-matter may also be restored to Ld. AO for adjudication afresh after the final outcome of the quantum-proceedings. We find merit in such submission. Since the very foundation of the impugned penalty is the addition made in the quantum-proceeding, which itself has been restored to the file of Ld. AO for a fresh adjudication and has not yet attained finality, we deem it appropriate to set aside the penalty-order and restore the present matter also to the file of Ld. AO for adjudication afresh in accordance with law after the quantum-proceeding attains finality. Needless to say, the assessee shall be afforded adequate opportunity of being heard.

5.

Resultantly, this appeal is allowed for statistical purpose.

Order pronounced in open court on 19/06/2026 Sd/- Sd/- (SUCHITRA KAMBLE) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat True Copy दिन ांक /Dated : 19/06/2026 Rajesh/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order

UE COPYAssistant Registrar Income Tax Appellate Tribunal Surat Bench, Surat

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