OMMI SANDEEP,VIZIANAGARAM vs. THE INCOME TAX OFFICER, WARD-1, VIZIANAGARAM, VIZIANAGARAM

Succinctly stated, the assessee had filed his return of income for AY 2019- 20 on 29/08/2019, declaring an income of Rs.5,15,830/-.

Thereafter, the AO vide his order passed under section 147 r.w.s 144 fo the Act, dated 22/02/2024, after making an addition of Rs.6,60,000/- under section 69 of the Act regarding the unexplained investment made by the assessee towards purchase of a flat, determined his income at Rs.11,75,830/-.

Thereafter, the order passed by the AO under section 147 r.w.s 144 of the Act, dated 22/02/2024 was upheld by the CIT(A) vide his order, dated 26/06/2025.

Thereafter, the AO vide his order under section 271AAC(1) of the Act, dated 27/11/2025 as regards the addition made under section 69 of the Act of Rs.6,60,000/- imposed a penalty of Rs.51,480/-.

Aggrieved, the assessee carried the matter in appeal before the CIT(A) but without success.

The assessee, aggrieved with the order of the CIT(A) has carried the matter in appeal before us.

We have heard the Learned Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record.

Shri GVN Hari, Advocate, Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal submitted that the quantum addition of Rs.6,60,000/- made by the AO under section 69 of the Act, which thereafter had been sustained by the CIT(A), has been vacated by the Tribunal vide its order passed in ITA No. 507/Viz/2025, dated 25/02/2026. The Ld. AR to buttress his contention has taken us through the aforesaid order passed by the Tribunal, Page 35-41 of APB. It was submitted that now when the quantum addition based on which the impugned penalty has been imposed in itself has been vacated, the impugned penalty cannot be sustained and is liable to be quashed.

Per contra, Shri A.P. Babu, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) on being confronted with the aforesaid factual position did not rebut the same.

We have given thoughtful consideration and are of the view that now when the impugned addition made by the AO under section 69 of the Act of Rs.6,60,000/- which forms the very basis for the penalty imposed by the AO under section 271AAC(1) of the Act has itself been vacated by the Tribunal vide its order passed in ITA No.507/Viz/2025, dated 19/02/2026, therefore, the impugned penalty has to meet the same fate and is liable to be vacated.

We thus, quash the penalty imposed by the AO under section 271AAC(1) of the Act.

In the result, appeal filed by the assessee is allowed in terms of our aforesaid observations. Order pronounced in the open court on 14th October, 2026.