SPHERE,SURAT vs. ITO, WARD-1(3)(1), SURAT

ITA 96/SRT/2026Status: DisposedITAT Rajkot23 September 2026AY 2009-104 pages
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What did the Tribunal hold?

The Tribunal held that the additions forming the basis for the levy of penalty under Section 271(1)(c) are currently the subject matter of quantum proceedings before the CIT(A), following the order of the co-ordinate bench dated 07.07.2021. Therefore, the foundation upon which the impugned penalties were levied is not yet final. In the interest of justice and to avoid multiplicity of proceedings, the Tribunal deemed it appropriate to restore the penalty proceedings to the file of the CIT(A) for fresh adjudication after the conclusion of the quantum proceedings. The CIT(A) was directed to consider the outcome of the quantum proceedings and decide the penalty issue afresh, after providing the assessee a reasonable opportunity of being heard. The appeals were allowed for statistical purposes.

What were the facts?

The assessee, Sphere, filed six appeals (ITA Nos. 96 to 101/SRT/2026) before the Income Tax Appellate Tribunal (ITAT), Surat Bench, challenging orders dated 04.11.2025 passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. These appellate orders confirmed penalties levied by the National Faceless Assessment Centre (NFAC), Delhi, under Section 271(1)(c) of the Income-tax Act, 1961. The penalties were based on additions made in assessment orders for Assessment Years 2009-10 to 2014-15. The assessee had previously filed appeals against the quantum additions (ITA Nos. 491/SRT/2018 to 496/SRT/2018), which were restored to the CIT(A) for fresh adjudication by a co-ordinate bench of the ITAT on 07.07.2021. The quantum proceedings are still pending.

What were the issues?

1. Whether the penalty proceedings under Section 271(1)(c) can be adjudicated when the quantum additions forming the basis of such penalties are still pending adjudication before the Commissioner of Income-tax (Appeals)? Assessee's contention: The assessee argued that since the appeals against the assessment orders (quantum proceedings) were restored to the CIT(A) for fresh adjudication, the present penalty appeals should also be restored to the Assessing Officer (AO) for fresh adjudication after the conclusion of the quantum proceedings. The assessee relied on the order of the co-ordinate bench dated 07.07.2021. Revenue's contention: The revenue did not object to the assessee's submission.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: MS. SUCHITRA KAMBLE & SHRI B.M. BIYANI

For Appellant: Shri Sapnesh Sheth, Advocate
For Respondent: Shri Ashish Kumar, Sr.DR
Hearing: 21.09.2026Pronounced: 23.09.2026

Per Bench: The captioned six (6) appeals pertaining to six (6) Assessment-Years 2009- 10 to 2014-15 are filed by assessee challenging six (6) separate orders of first-appeal, all dated 04.11.2025 and passed by learned Commissioner of Income-tax, National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”], which in turn arise out of respective penalty-orders dated 25.03.2022/26.03.2022 passed by learned National Faceless Assessment Centre, Delhi [“Ld. AO”] u/s 271(1)(c) of the Income-tax Act, 1961. Sphere ITA Nos. 96-101/SRT/2026 (AYs.

The order continues below.

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