SALT LAKE SERVICE STATION,KOLKATA vs. D.C.I.T., CIRCLE - 49(1), KOLKATA

ITA 497/KOL/2026Status: DisposedITAT Kolkata21 September 2026AY 2017-20184 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty proceedings under Section 271AAC(1) cannot be sustained if the quantum addition, which formed the basis for the penalty, has been deleted. The reasoning was that the order imposing penalty under Section 271AAC(1) was predicated on the assessee making huge cash deposits and failing to prove their nature and source, leading to an addition under Section 69A. However, the ITAT, in a prior appeal (ITA No. 431/2025), had deleted this addition under Section 69A. Since the quantum addition was deleted, the penalty proceedings based on that addition are consequently unsustainable in law. The Tribunal allowed the appeal of the assessee and deleted the penalty. No issue was expressly left undecided.

What were the facts?

The assessee, Salt Lake Service Station, filed an appeal against an order dated 29.01.2026 passed by the National Faceless Appeal Centre (NFAC), Delhi, under Section 271AAC(1) of the Income-tax Act, 1961, for the Assessment Year 2017-18. The impugned order imposed a penalty due to the assessee's failure to prove the nature and source of cash deposits totaling Rs. 6,06,52,500/- in a bank account. The assessee had previously filed an appeal (ITA No. 431/2025) against the quantum addition made under Section 69A of the Act, which was deleted by the ITAT Kolkata.

What were the issues?

1. Whether penalty proceedings under Section 271AAC(1) can be sustained when the underlying addition under Section 69A has been deleted by the Tribunal? (Question of law) Assessee's contention: The learned AR argued that the penalty proceedings cannot be sustained in law because the quantum appeal, which formed the basis for the penalty, has been deleted by the ITAT vide its order in ITA No. 431/2025. The assessee relied on the ITAT Kolkata's order in ITA No. 431/2023. Revenue's contention: The learned Senior Departmental Representative supported the impugned order, submitting that penalty proceedings are separate from the quantum proceedings.

Which sections of the Income-tax Act were involved?

Section 271AAC(1),Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, KOLKATA

Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey

Per Pradip Kumar Choubey, Judicial Member:

This appeal filed by the assessee is directed against the order dated 29.01.2026 of the National Faceless Appeal Centre (NFAC), Delhi passed under Section 271AAC1 of the Assessment Year 2017-18 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).

2.

The Ld. AR instead of arguing into the merit of the case only said that the present penalty proceedings cannot be

The order continues below.

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