M/S. N.R.INFRA,CHENNAI vs. ITO, NCW-8(2), CHENNAI

ITA 3405/CHNY/2026Status: DisposedITAT Chennai07 October 2026AY 2021-224 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the AO passed the penalty order considering departmental information and the assessee's partial reply. The CIT(A) dismissed the appeal in limine due to the delay. The Tribunal, while acknowledging the delay and non-cooperation, decided to give the assessee one more opportunity to meet the ends of justice. The Tribunal condoned the delay in filing the appeal before the CIT(A), as the assessee had filed a condonation of delay application. Consequently, the order of the CIT(A) was set aside, and the matter was remitted back to the CIT(A) to adjudicate the appeal de novo on merits, after providing a reasonable opportunity to the assessee. The assessee was directed to be diligent and file written submissions and relevant documents. A cost of Rs. 10,000/- was levied on the assessee, payable to the State Legal Aid Authority, High Court of Madras.

What were the facts?

The assessee, M/s. N.R INFRA, filed an appeal against a penalty order passed by the AO, NFAC, under Section 271E of the Income Tax Act, 1961, for Assessment Year 2021-22. The penalty of Rs.1,00,79,127/- was levied for repaying this amount otherwise than by account payee cheque, bank draft, or electronic clearing system, in violation of Section 269T. The assessee's appeal before the CIT(A) was dismissed in limine due to a delay of 152 days in filing. The assessee then filed an appeal before the ITAT against the CIT(A)'s order.

What were the issues?

1. Whether the penalty under Section 271E can sustain when the quantum assessment, on which it is based, has been set aside. (Question of law) 2. Whether the AO erred in levying penalty under Section 271E by treating the audit report entry as conclusive proof of cash repayment without independent verification. (Question of mixed law and fact) Assessee's Contentions: - The learned AR argued that the penalty cannot succeed as the quantum assessment has been set aside. They also contended that the AO erred in levying the penalty based solely on the audit report without independent verification. Revenue's Contentions: - The learned DR argued that the appeal before the CIT(A) was filed with a delay of 152 days and the assessee was negligent in filing within the prescribed time limit, thus praying for confirmation of the CIT(A)'s order.

Which sections of the Income-tax Act were involved?

Section 271E,Section 269T,Section 143(3),Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI S.S. VISWANETHRA RAVI & SHRI S. R. RAGHUNATHA

For Respondent: Ms. R. Anita, CIT
Hearing: 18.08.2026Pronounced: 07.10.2026

PER S.R. RAGHUNATHA, AM : This appeal of the assessee is filed against the order of the learned Commissioner of Income Tax (Appeals), NFAC, Delhi, (in short ‘ld.CIT(A)’) for the assessment year 2021-22, vide the order dated 20.04.2026 against the penalty order passed by the AO, NFAC u/s.271E of the Income Tax Act, 1961 (in short ‘the Act’) dated 31.01.2025. :-2-:

2.

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