RAMA NAIDU GUTHA,ANANTAPUR vs. ITO, WARD-1, ANANTAPUR

ITA 1894/HYD/2026Status: DisposedITAT Hyderabad16 October 2026AY 2023-245 pages
AI SummaryAllowed

What were the facts?

The assessee, Rama Naidu Gutha, filed appeals against orders of the CIT(A) NFAC, Delhi, dated 31/03/2026, which upheld penalties imposed by the Assessing Officer (AO). The AO had passed orders under section 271AAC(1) and section 270A of the Income Tax Act, 1961, for Assessment Year 2023-24. These penalties arose from an assessment order dated 10/02/2025, passed under section 144 r.w.s 144B, where the AO determined the assessee's income at Rs.27,51,088/- after additions of Rs.19,51,223/- under section 69A and disallowance of deduction of Rs.2,84,065/-. The penalties imposed were Rs.1,17,073/- under section 271AAC(1) and Rs.1,18,170/- under section 270A. The assessee's appeals before the ITAT challenged these sustained penalties.

What did the Tribunal hold?

The Tribunal held that the assessee's contention has substance. It noted that the Tribunal, in a separate order (ITA No. 1919/Hyd/2025 for AY 2023-24, dated 06/05/2026), had set aside the CIT(A)'s order concerning the quantum assessment and restored the matter to the AO for de novo assessment. This de novo assessment was to include proper verification of additional evidence regarding credit card payments and claims for deduction under Chapter-VIA. Since the quantum assessment, which is the foundation for the impugned penalties, has been set aside, the penalties are also liable to be set aside and remanded to the AO. The AO is directed to take up the penalty proceedings after passing a fresh assessment order. The appeals were allowed for statistical purposes.

What were the issues?

1. Whether the penalties imposed under section 271AAC(1) and section 270A of the Income Tax Act, 1961, are liable to be set aside in light of the fact that the quantum assessment order, which forms the basis for these penalties, has been set aside by the Tribunal for de novo assessment. Assessee's contention: The assessee argued that since the quantum assessment order has been set aside by the Tribunal and does not survive, the impugned penalties, which are based on that assessment, should also be set aside and remanded to the AO for re-decision after a fresh assessment order is framed. Revenue's contention: The judgment records no specific contention from the revenue regarding this issue.

Which sections of the Income-tax Act were involved?

Section 271AAC(1),Section 270A,Section 69A,Section 144,Section 144B,Section 44AD

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Income Tax Appellate Tribunal, HYDERABAD BENCHES, HYDERABAD

Before: MANJUNATHA G, HON’BLE & SHRI RAVISH SOOD, HON’BLE

PER RAVISH SOOD, JM: The captioned appeals filed by the assessee are directed against the respective orders of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (for short, “CIT(A)”), dated 31/03/2026, which in turn arise from the respective orders passed by the Assessing Officer (for short, “AO”) under section 271AAC(1) of the Income Tax Act, 1961 (for short,

ITA 1894

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