PUKHRAJ BHOMAJI MUTHA,KHETWADI, MUMBAI vs. WARD 19(2)(4), MUMBAI, LALBAUG, MUMBAI

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ITA 4938/MUM/2026Status: DisposedITAT Mumbai14 October 2026AY 2011-123 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty orders levied under Section 271(1)(c) of the Income Tax Act for Assessment Years 2010-11 and 2011-12 would not survive. The reasoning was that the Tribunal's earlier order dated 05.06.2024 had set aside the assessments for these years to the Assessing Officer for de novo consideration. As a consequence of the assessments being set aside, the quantum additions no longer existed. Therefore, the penalty orders, which were based on these quantum additions, were rendered unsustainable. The Tribunal set aside the orders passed by the Assessing Officer under Section 271(1)(c) for both assessment years. The operative direction was to set aside the penalty orders.

What were the facts?

The assessee, Pukhraj Bhomaji Mutha, filed two appeals before the Income Tax Appellate Tribunal (ITAT), Mumbai Bench, challenging the orders of the NFAC, Delhi. These orders, dated 21.02.2026, sustained penalties levied under Section 271(1)(c) of the Income Tax Act for Assessment Years 2010-11 and 2011-12. The assessee's primary contention was that the quantum additions/disallowances, which formed the basis for the penalty, had been set aside by the Tribunal itself in earlier proceedings. The assessee presented a copy of the Tribunal's order dated 05.06.2024, which restored the matter to the Assessing Officer for de novo consideration. The revenue was represented by Shri Ajay Soneji, Sr. DR.

What were the issues?

1. Whether the penalty orders passed under Section 271(1)(c) of the Income Tax Act, 1961, are sustainable when the underlying quantum additions/disallowances have been set aside by the Tribunal for de novo consideration? (Question of law) Assessee's contention: The assessee argued that since the assessment orders containing the quantum additions/disallowances were set aside by the Tribunal for fresh consideration, these additions no longer existed. Consequently, the penalty orders, which were predicated on these non-existent additions, should also not survive. Revenue's contention: The judgment records no specific argument from the revenue on this point.

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, MUMBAI

Before: CHALLA NAGENDRA PRASAD & MR. G.M. DOSS

Pronounced: 14/10/2026

Heard together (2 matters)

ITA 4937/MUM/2026
ITA 4938/MUM/2026

Read from the judgment's own cause title. This page is filed under one of them.

PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER: These two appeals are filed by the assessee against the orders of the Ld. Commissioner of Income Tax (Appeals)- NFAC, Delhi dated 21.02.2026 for the assessment years 2010-

ITA 4937/MUM/2026 PUKHRAJ BHOMAJI MUTHA

11 and 2011-12 respectively in sustaining the penalty levied u/s. 271(1)(c) of the Act.

2.

The Ld. Counsel for the assessee, at the outset, submitted that the quantum additions/disallowances made by the Assessing Officer in the quantum proceedings were set aside and the matter was restored to the file of the Assessing Officer for de novo consideration. Since the assessment orders were set aside to the Assessing Officer for de novo consideration, the additions/disallowances made in such assessment orders were no longer in existence and, thus, the penalty orders passed on the basis of such additions would not survive. A copy of the order of the Tribunal setting aside the proceedings for the assessment years 2010-11 and 2011-12 in ITA Nos. 2155/Mum/2024 and 2152/Mum/2024, respectively dated 05.06.2024 was placed at page 33 of the paper book.

3.

Heard rival submissions and perused the orders of the Tribunal placed before us. On perusal of the order of the Tribunal, we noticed that the assessments for the assessment years 2010-11 and 2011-12 were set aside to the file of the Assessing Officer for de novo consideration. Therefore, since the assessments were set aside, the additions no longer survive

ITA 4937/MUM/2026 PUKHRAJ BHOMAJI MUTHA

and, consequently, the penalty orders based on such quantum additions will also not survive. Thus, we set aside the orders passed by the Assessing Officer u/s. 271(1)(c) of the Act for the assessment years 2010-11 and 2011-12.

4.

In the result, the appeals of the assessee are allowed.

Order pronounced in the open court on 14/10/2026

Sd/- Sd/- G.M. DOSS CHALLA NAGENDRA PRASAD ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 14/10/2026 Prabhat

Copy to: PUKHRAJ BHOMAJI MUTHA, 1605 SIDDESH DARSHAN, 10TH 1 KHETWADI, MUMBAI-400004, MUMBAI-400004, MAHARASHTRA

WARD 19(2)(4), MUMBAI, PIRAMAL CHAMBERS, LALBAUG, 2 MUMBAI-400012, MUMBAI-400012, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE TRUE COPY Digitally signed by ABHINAV ANANT ABHINAV ANANT GAVANDE GAVANDE Date: 2026.10.24 15:28:46 +05'30' ASSISTANT REGISTRAR / SR. PRIVATE SECRETARY I.T.A.T., MUMBAI

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