KOTHANDARAMAN SURESH,VELLORE vs. ITO, WARD-1,, VELLORE

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ITA 3736/CHNY/2026Status: DisposedITAT Chennai12 October 2026AY 2018-193 pages
AI SummaryWithdrawn

What did the Tribunal hold?

The Tribunal noted that the assessee had filed the appeal against the penalty order dated June 30, 2025, directly before the ITAT without exhausting the statutory remedy available before the first appellate authority (CIT(A)). When this procedural defect was pointed out, the assessee's Authorized Representative (AR) expressed the desire to withdraw the appeal. The Tribunal accepted the assessee's plea for withdrawal. The appeal was allowed to be withdrawn with liberty granted to the assessee to file an appeal before the first appellate authority. The Tribunal further directed that if the assessee files the appeal within 30 days from the receipt of the order, the first appellate authority shall not raise the issue of limitation. Consequently, the instant appeal was dismissed as withdrawn.

What were the facts?

The assessee, Kothandaraman Suresh (HUF), filed an appeal before the Income Tax Appellate Tribunal (ITAT), Chennai, challenging a penalty order passed by the Assessing Officer (AO) under Section 271AAC(1) of the Income Tax Act, 1961. The assessment year in question is 2018-19. The AO had passed the penalty order on June 30, 2025, imposing a penalty of Rs. 6,84,280. The AO's assessment order, passed on March 24, 2023, included total additions of Rs. 91,31,730, with Rs. 88,58,000 added under Section 69A. The Revenue objected to the appeal being filed directly before the ITAT, arguing that the assessee had not exhausted the remedy of appeal before the first appellate authority, the CIT(A). The assessee's counsel conceded to this objection.

What were the issues?

1. Whether the appeal filed by the assessee against the penalty order passed under Section 271AAC(1) of the Income Tax Act, 1961, is maintainable before the Income Tax Appellate Tribunal without first exhausting the remedy of appeal before the Commissioner of Income Tax (Appeals) (CIT(A))? Assessee's contention: The assessee's counsel could not controvert the objection raised by the Revenue regarding the maintainability of the appeal. The assessee subsequently expressed a desire to withdraw the appeal. Revenue's contention: The appeal is not maintainable before the ITAT as the assessee ought to have preferred an appeal before the first appellate authority, the CIT(A), before approaching the Tribunal. The Revenue sought dismissal of the appeal on this ground.

Which sections of the Income-tax Act were involved?

Section 271AAC(1),Section 69A,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & MS. PADMAVATHY. S

Hearing: 20.08.2026Pronounced: 12.10.2026

आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the penalty order passed u/s.271AAC(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the Assessing Officer (hereinafter referred to as the ‘AO’) dated 30.06.2025 for AY 2018-19.

2.

At the outset, Ld. DR for the Revenue objected to the filing of this appeal directly before this Tribunal. According to him, this appeal is

ITA 3736 /Chny/2026 (AY 2018-19) Kothandaraman Suresh (HUF) :: 2 :: against the penalty levied by the AO u/s. 271AAC (1) of the Act. According to him, the assessee ought to have exhausted the remedy available by preferring an appeal before the first appellate authority i.e. Ld. CIT(A) before preferring an appeal before this Tribunal. Hence, he wants us to dismiss the appeal of the assessee.

3.

Per contra, the Ld. AR for the assessee could not controvert the objection raised by the Revenue.

4.

Heard both the parties and after perusal of the records, it is noted that in this case assessment order was passed on 24.03.2023 for AY 2018-19 wherein AO made a total addition of Rs.91,31,730/- which includes an addition made u/s.69A of the Act to the tune of Rs.88,58,000/-. Thereafter, the AO is noted to have initiated penalty u/s.271AAC of the Act and levied penalty by passing the impugned order on 30.06.2025 imposing penalty of Rs.6,84,280/- (10% of tax payable as per Section 115BBE of the Act). The assessee is noted to have filed the appeal against the impugned penalty order dated 30.06.2025 directly before this Tribunal without exhausting the remedy available before the first appellate authority. When this defect was pointed out, the Ld. AR for the assessee expressed his desire to withdraw the appeal. Hence, his plea is accepted and the assessee is allowed to withdraw this appeal with liberty to file appeal before the first appellate authority. And if the

ITA 3736 /Chny/2026 (AY 2018-19) Kothandaraman Suresh (HUF) :: 3 :: assessee files the appeal within 30 days from the date of receipt of this order, then the first appellate authority shall not raise the question of limitation for filing of the appeal before him. With this observation, we allow the assessee to withdraw the instant appeal.

5.

In the result, the appeal of the assessee is dismissed as withdrawal.

Order pronounced on the 12th day of October 2026, in Chennai.

Sd/- Sd/-

(प�ावती .एस) (एबी टी. वक�) (PADMAVATHY. S) (ABY T. VARKEY) लेखा सद�य/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER चे�नई/Chennai, �दनांक/Dated: 12th October, 2026. YS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF YASHVIR Digitally signed by YASHVIR SINGH SINGH Date: 2026.10.16 14:57:46 +05'30'

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