PREETHI T S,HOSUR vs. INCOME TAX OFFICER, CHENNAI

ITA 1781/CHNY/2026Status: DisposedITAT Chennai06 October 2026AY 2019-20206 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that penalties levied under Section 270A and Section 271AAC(1) cannot survive when the very additions that formed the basis for these penalties have been completely deleted in the quantum proceedings. The Tribunal noted that the AO, in an order giving effect to appellate directions, deleted the entire additions of Rs. 14,01,878/-, resulting in a revised total income of Rs. 26,550/- with Nil tax liability. This deletion removed the foundation for the penalties under Sections 270A (under-reporting of income) and 271AAC(1) (tax on unexplained income). The Tribunal found substantial force in the assessee's contention that penalty proceedings are consequential and cannot be sustained if their substratum is removed. Regarding the penalty under Section 272A(1)(d) for failure to comply with notices, the Tribunal, considering the assessee's subsequent participation, furnishing of details, and the ultimate deletion of additions, decided to delete this penalty as well in the peculiar facts and circumstances. The Tribunal set aside the CIT(A)'s orders and deleted all the impugned penalties.

What were the facts?

The assessee, an individual, failed to file a return of income for Assessment Year 2019-20. The Assessing Officer (AO) initiated reassessment proceedings under Section 147 of the Income Tax Act, 1961, based on information about an immovable property purchase and interest income. The assessee did not respond to notices, leading the AO to make an addition of Rs. 14,01,878/- for unexplained investment and income from other sources under Section 56(2)(x). Subsequently, the AO initiated penalty proceedings under Sections 270A, 271AAC(1), and 272A, levying penalties of Rs. 46,735/-, Rs. 40,170/-, and Rs. 30,000/- respectively. The assessee appealed these penalty orders to the Commissioner of Income-tax (Appeals) [CIT(A)] with a delay of 139 days. The CIT(A) dismissed the appeals in limine due to the delay. The assessee then appealed to the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether penalties levied under Section 270A and Section 271AAC(1) of the Income Tax Act, 1961, can survive when the additions/income in respect of which they were levied have subsequently been deleted in the quantum proceedings? 2. Whether the penalty levied under Section 272A(1)(d) of the Income Tax Act, 1961, can be sustained in light of the subsequent developments in the quantum proceedings? Assessee's arguments: The delay in filing appeals before the CIT(A) was due to the assessee's lack of awareness of the procedure for filing separate appeals, believing a quantum appeal would suffice for penalties. The assessee highlighted that the quantum appeal was subsequently restored to the AO, who deleted all additions and determined Nil tax liability. Therefore, the consequential penalties should be deleted. Revenue's arguments: The revenue supported the CIT(A)'s orders, arguing that the appeals were filed belatedly and there was no sufficient cause to condone the delay, thus the dismissal was justified.

Which sections of the Income-tax Act were involved?

Section 270A,Section 271AAC(1),Section 272A(1)(d),Section 147,Section 56(2)(x),Section 251(1)(a)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI MANU KUMAR GIRI & SHRI S. R. RAGHUNATHA

For Respondent: Shri. A.T.Krishnamoorthy, Addl.CIT
Hearing: 05.08.2026Pronounced: 05.10.2026

PER BENCH: These appeals have been filed by the assessee against the three separate orders, all are dated 13.03.2026 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “the CIT(A)”] for the Assessment Year 2019-20, whereby the ld.CIT(A) dismissed the appeal of the assessee against the penalty imposed by the Assessing Unit, Income Tax

The order continues below.

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