JOSEPH DOMNIC DSOUZA,MUMBAI vs. ITO WARD 24(2)(1), MUMBAI, MUMBAI

ITA 7483/MUM/2026Status: DisposedITAT Mumbai23 September 2026AY 2016-1712 pages
AI SummaryAllowed

What were the facts?

The assessee, Joseph Domnic Dsouza, an individual, did not file a return of income for Assessment Year 2016-17. Reassessment proceedings were initiated under section 147 read with sections 144 and 144B of the Income-tax Act, 1961. The assessment was completed ex parte, determining total income at ₹55,62,000, treated as unexplained cash deposits. The Assessing Officer (AO) initiated penalty proceedings under section 271AAC and 272A(1)(d) in the assessment order dated 15.02.2024. However, a penalty of ₹17,18,658 was later levied under section 271(1)(c) by an order dated 21.08.2024. The Commissioner of Income-tax (Appeals) confirmed this penalty. The assessee appealed to the ITAT against the penalty order dated 23.01.2026.

What did the Tribunal hold?

The Tribunal held that the penalty levied under section 271(1)(c) was invalid. The assessment order clearly and unambiguously recorded the initiation of penalty proceedings under section 271AAC and contained no satisfaction or direction for initiation under section 271(1)(c). Sections 271AAC and 271(1)(c) operate in distinct statutory fields with different conditions and consequences. Initiation under section 271AAC cannot be treated as an implied initiation under section 271(1)(c), nor can the latter provision be substituted at the penalty imposition stage. The recital in the penalty order that proceedings under section 271(1)(c) were initiated separately in the assessment order was demonstrably contrary to the assessment order itself. A subsequent notice under section 271(1)(c) cannot cure the absence of foundational satisfaction during assessment proceedings. The jurisdictional objection arises from the face of the assessment order and does not depend on the outcome of the pending quantum appeal. Therefore, the penalty of ₹17,18,658 imposed under section 271(1)(c) travels beyond the jurisdiction assumed by the AO and cannot be sustained. The penalty was directed to be deleted. The Tribunal clarified that its decision was confined to the validity of the penalty under section 271(1)(c) and did not express any opinion on the merits of the addition or the quantum appeal.

What were the issues?

1. Whether the penalty levied under section 271(1)(c) is valid when the assessment order explicitly initiated penalty proceedings under section 271AAC, and there was no satisfaction recorded for initiation under section 271(1)(c)? (Question of law) Assessee's contentions: The penalty suffers from an incurable jurisdictional defect as proceedings were initiated under section 271AAC but penalty was imposed under section 271(1)(c). Proceedings under one penal provision cannot validly culminate in penalty under another provision with different conditions. The assessment order's direction for initiation under section 271AAC is unambiguous and cannot be substituted retrospectively. The subsequent notice under section 271(1)(c) cannot cure the absence of foundational satisfaction during assessment proceedings. Revenue's contentions: The assessee failed to file a return and satisfactorily explain cash deposits. The AO was justified in imposing the penalty. The matter could be restored to the CIT(A) for decision after the quantum appeal is disposed of.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 271AAC,Section 272A(1)(d),Section 271(1)(c),Section 115BBE,Section 68,Section 69,Section 271(1B)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘F’ BENCH

For Appellant: Ms. Kinjal Bhuta
For Respondent: Shri Dhiraj Kumar, SR DR
Hearing: 23/09/2026Pronounced: 23/09/2026

PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against the order dated 23.01.2026 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], confirming the penalty of ₹17,18,658 levied by the Assessing Officer under section 2 Joseph Domnic Dsouza 271(1)(c) of the Income-tax Act, 1961 (“the Act”), for the Assessment Year 2016–17. 2. The assessee has challenged the impugned penalty, inter alia, on the ground that the Assessing Officer, while completing the assessment under section 147 read with sections 144 and 144B of the Act, had initiated penalty proceedings only under section 271AAC and not under section 271(1)(c); and, therefore, the penalty subsequ

The order continues below.

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