VIVEK TRIVEDI,MUMBAI vs. ACIT, CIRCLE 42(3)(1), MUMBAI, MUMBAI

Before us, the learned counsel for the assessee submitted that the additions which constitute the very foundation of the impugned penalty are under challenge in the quantum appeal filed before the learned CIT(A) in Form No. 35 on 03.09.2024, and that the said appeal is still pending adjudication. He, therefore, submitted that the fate of the penalty under section 270A is inextricably linked with the outcome of the quantum proceedings and prayed that the matter may be restored to the file of the learned CIT(A) for adjudication afresh after disposal of the quantum appeal. The learned Departmental Representative relied upon the impugned order; however, the factual position regarding pendency of the quantum appeal was not controverted.

We have heard the rival submissions and perused the material available on record. It is evident from the penalty order, as well as from the impugned appellate order, that the

A penalty under section 270A is necessarily founded upon the income ultimately determined as under-reported or misreported in accordance with the statutory parameters prescribed therein. Consequently, any deletion, reduction, modification or confirmation of the additions in the quantum proceedings would have a direct and material bearing upon both the leviability and the quantum of the penalty. Adjudication of the penalty appeal while the underlying additions are still awaiting appellate determination would, therefore, be premature and may result in the penalty issue being examined on a foundation which is itself liable to alteration. In these circumstances, the proper course is to require the learned CIT(A) to decide the penalty appeal after the quantum appeal has been adjudicated, so that the matter may be examined in the light of the additions, if any, which ultimately survive.

Accordingly, without expressing any opinion on the merits of the additions or on the independent contentions of the assessee concerning the levy of penalty under section 270A, we set aside the impugned order and restore the penalty appeal to the file of the learned CIT(A). The learned CIT(A) shall first dispose of the quantum appeal and thereafter adjudicate the penalty appeal afresh in accordance with law, having regard to the outcome of the quantum proceedings and after affording reasonable opportunity of hearing to the assessee. The assessee, in turn, shall extend due cooperation and place all requisite material and submissions before the learned CIT(A). The grounds raised by the assessee are, accordingly, allowed for statistical purposes.

In the result, the appeal of the assessee is allowed for statistical purposes.