PR. COMMISSIONER OF INCOME TAX, CENTRAL II vs. M/S SOMANI WORSTED LIMITED

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ITA/555/2026HC DelhiDLHC01031291202628 July 2026Author: HON'BLE MR. JUSTICE RAJNEESH KUMAR GUPTA,HON'BLE MR. JUSTICE DINESH MEHTA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal. The Court reasoned that since the Department's appeal concerning the quantum of income, which was based on the same ITAT order, had already been dismissed by the High Court on 24.07.2026, the present appeal challenging the setting aside of the penalty order would, as a natural corollary, also fail. The principle applied is that if the primary addition or assessment is deleted, the consequential penalty also stands deleted. The Court did not decide the merits of the penalty itself but dismissed the appeal based on the prior decision on the quantum. No issue was left undecided.

What were the facts?

The appellant, Principal Commissioner of Income Tax, Central II, filed an appeal (ITA 555/2026) before the Delhi High Court challenging an order of the Income Tax Appellate Tribunal (ITAT), Delhi Bench. This ITAT order, dated 26.11.2025, had set aside a penalty order. The appeal before the High Court pertained to the penalty aspect, while a separate appeal (ITA 578/2026) by the Department concerning the quantum of income had already been rejected by the High Court on 24.07.2026. The High Court's decision on the quantum appeal relied on its prior judgment in Principal Commissioner of Income Tax-1 (Central-1) v. Ojjus Medicare Pvt. Ltd. The present appeal was filed by the Revenue.

What were the issues?

1. Whether the High Court should entertain the appeal against the ITAT's order setting aside the penalty, given that the Department's appeal on the quantum of income for the same assessment year(s) has already been dismissed by the High Court. (Question of law and fact, turning on the principle of consequential relief). Assessee's contentions: The judgment does not record any specific contentions made by the assessee (M/s Somani Worsted Limited). Revenue's contentions: The Revenue, through its counsel, informed the Court about the dismissal of its appeal on the quantum of income and argued that the present appeal relates to the penalty arising from the same order. The Revenue implicitly sought to have the penalty appeal considered on its merits.

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
$~2 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 555/2026 PR. COMMISSIONER OF INCOME TAX, CENTRAL II .....Appellant Through: Mr. Vipul Agrawal SSC with Ms. Sakshi Shairwal, Mr. Akshat Singh, JSCs. versus M/S SOMANI WORSTED LIMITED .....Respondent Through: CORAM: HON'BLE MR. JUSTICE DINESH MEHTA HON'BLE MR. JUSTICE RAJNEESH KUMAR GUPTA

O R D E R %

28.07.

2026

1.

Mr. Vipul Agrawal, learned Senior Standing Counsel for the appellant at the outset informed that ITA 578/2026 filed by the Department challenging the common order of the Income Tax Appellate Tribunal, Delhi Benchs ‘E’, New Delhi dated 26.11.2025, whereby the appeal on merit quantum, has been rejected by this Court vide its order dated 24.07.2026 relying upon the judgment of this Court in the case of Principal Commissioner of Income Tax-1 (Central-1) v. Ojjus Medicare Pvt. Ltd. reported in [2024] 465 ITR 101 (Delhi) and informed that present appeal relates to penalty relating to very same order.

2.

In our considered opinion, since the Department’s appeal on quantum has been dismissed, the present appeal which lays challenges to setting aside This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/07/2026 at 14:56:00

the penalty order would, as a natural corollary, also go.

3.

The appeal is, therefore, dismissed.

DINESH MEHTA, J.

RAJNEESH KUMAR GUPTA, J. JULY 28, 2026/sid This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/07/2026 at 14:56:00

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