BAPTIST CHURCH DILSUKHNAGAR,HYDERABAD vs. ITO, WARD-1(1), EXEMPTIONS, HYDERABAD

ITA 1386/HYD/2026Status: DisposedITAT Hyderabad30 September 2026AY 2012-135 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961, is consequential to the additions made by the Assessing Officer in the quantum assessment. As the Tribunal, in its order dated 27.03.2026 in ITA.No.1730/Hyd./2025, had set aside the quantum assessment for Assessment Year 2012-2013 and remanded the matter to the Assessing Officer for fresh adjudication, the penalty levied on the basis of those additions could not survive. Therefore, the penalty was deleted. The Tribunal clarified that the Assessing Officer is at liberty to initiate penalty proceedings as per the outcome of the remand proceedings in the quantum matter. The issue regarding the leviability of penalty under Section 271AAC(1) was not explicitly decided, as the penalty was deleted on the ground of the set-aside quantum assessment.

What were the facts?

The assessee, Baptist Church, filed an appeal against the order of the CIT(A)-NFAC, Delhi, for Assessment Year 2012-2013. The appeal challenged the sustenance of a penalty of Rs. 5,42,079. The assessee argued that the penalty was not leviable under Section 271AAC(1) and should be cancelled. The revenue relied on the orders of the authorities below. The Tribunal noted that in the quantum appeal for the same assessment year, the Tribunal had previously set aside the assessment order to the Assessing Officer (AO) for fresh adjudication after verification of records. This prior order was passed by the Tribunal on 27.03.2026 in ITA.No.1730/Hyd./2025.

What were the issues?

1. Whether the penalty of Rs. 5,42,079 sustained by the learned CIT(A) is not sustainable in law, given that the quantum assessment has been set aside to the file of the Assessing Officer. - Assessee's contention: The penalty levied under Section 271(1)(c) is consequential to the addition made in the quantum assessment. Since the quantum assessment has been set aside and remanded to the AO for fresh adjudication, the penalty cannot be sustained and ought to be cancelled. The assessee also argued that penalty under Section 271AAC(1) is not leviable. - Revenue's contention: The learned DR relied upon the orders of the authorities below. 2. Whether the penalty under Section 271AAC(1) is leviable. - Assessee's contention: The penalty under Section 271AAC(1) is not leviable and ought to be cancelled. - Revenue's contention: The learned DR relied upon the orders of the authorities below.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 271AAC(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD

Before: SHRI VIJAY PAL RAO

Pronounced: 30.09.2026

This appeal by the Assessee is directed against the order dated 30.03.2026 of the learned CIT(A)-National Faceless Appeal Centre [in short "NFAC"], Delhi, for the assessment year 2012-2013. 2. The Assessee has raised the following grounds of appeal:

1) “The order of the learned CIT (A) is erroneous both on facts and in law; 2) The learned CIT (A) ought to have considered the fact that the assessment is set a

The order continues below.

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