RAJNI BALA,JAIPUR vs. ITO, WARD-1(1),JPR, JAIPUR

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ITA 1389/JPR/2026Status: DisposedITAT Jaipur02 November 2026AY 2010-114 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the Learned CIT(A) erred in deciding the penalty appeal without adjudicating the quantum appeal, which was still pending before the same authority. The Tribunal reasoned that a consequential penalty appeal cannot be decided independently as it is contingent upon the outcome of the quantum appeal. The Tribunal acknowledged that this might have been an oversight due to workload. Consequently, the impugned order of the CIT(A) was deemed unsustainable and liable to be set aside. The matter was remanded back to the CIT(A) for a fresh decision after the quantum appeal is decided, and with an adequate opportunity of being heard to the assessee. The Tribunal allowed the appeal for statistical purposes.

What were the facts?

The assessee, Rajni Bala, is in appeal before the Income Tax Appellate Tribunal (ITAT) against an order of the National Faceless Appeal Centre (NFAC), Delhi, dated 26.03.2026. The NFAC had confirmed a penalty of Rs. 2,71,772/- levied by the Assessing Officer (AO) under Section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2010-11. The penalty was initiated based on an assessment framed under Section 147/144 of the Act, which made an addition of Rs. 12,09,516/- due to the assessee's failure to explain the source of a deposit. The assessee had filed an appeal against the penalty order before the CIT(A), which was dismissed. The assessee has also filed a separate appeal against the quantum assessment order, which was pending before the CIT(A) at the time of the penalty appeal's decision.

What were the issues?

1. Whether the Learned Commissioner of Income Tax (Appeals) has erred in confirming the penalty order passed by the Learned Assessing Officer, which is bad in law and against the facts of the case, turning on Section 271(1)(c) of the Income Tax Act, 1961. 2. Whether the Learned Authorities below have failed to appreciate that the quantum addition/disallowance on the basis of which penalty has been levied is itself disputed and the appeal against the assessment order is pending adjudication before the Learned CIT(A), therefore the penalty levied is premature, unjustified and liable to be deleted, turning on Section 271(1)(c) of the Income Tax Act, 1961. Assessee's contentions: - The penalty order is bad in law and against the facts. - The penalty is premature and unjustified as the quantum appeal is pending before the CIT(A). - The AO erred in levying penalty without establishing concealment of income or furnishing of inaccurate particulars. - The penalty order is illegal, arbitrary, excessive, and contrary to the Act. - Mere addition/disallowance does not automatically justify penalty. - The AO failed to record proper satisfaction before initiating penalty proceedings. - The penalty order was passed without properly considering the assessee's explanation. Revenue's contentions: - The Revenue did not controvert the assessee's contention that the quantum appeal was pending before the CIT(A) when the penalty appeal was decided.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 147,Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR “SMC” BENCH, JAIPUR

Before: SHRI KULDIP SINGH & SHRI PRAKASH

IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR “SMC” BENCH, JAIPUR (HYBRID HEARING) BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER & SHRI PRAKASH, ACCOUNTANT MEMBER ITA No: 1389/JPR/2026 Assessment year 2010-11

Rajni Bala The ITO, G-2, Ground Floor, Surya Ward-1(1), Vs Nagar, Jaipur. Jaipur. PAN: ALGPB3961J (Respondent) (Appellant)

Assessee Represented: Sh. Rahul Kr. Gupta, C.A. Revenue Represented: Mrs. Arti Rawat, JCIT (Thr.V.C.) Date of hearing : 08-10-2026 Date of pronouncement : 02-11-2026 ORDER PER : KULDIP SINGH, JUDICIAL MEMBER:-

The Appellant, Rajni Bala (hereinafter referred to as the ‘assessee’) by filing the present appeal, sought to set aside the impugned order dated 26.03.2026 passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the “CIT(A)”] confirming the penalty levied by the Assessing Officer to the tune of Rs. 2,71,772/- u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter

I.T.A No. 1389/JPR/2026 Page No 2 Rajni Bala

referred to as the “Act”) qua assessment year 2010-11 on the grounds inter-alia that:- “ 01. That on the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the penalty order passed by the Learned Assessing Officer, which is bad in law and against the facts of the case.

2.

That the Learned Authorities below have failed to appreciate that the quantum addition/disallowance on the basis of which penalty has been levied is itself disputed and the appeal against the assessment order is pending adjudication before the Learned CIT(A), therefore the penalty levied is, premature, unjustified and liable to be deleted.

3.

That the Learned Assessing Officer has erred in levying penalty without establishing any concealment of income or furnishing of inaccurate particulars by the assessee.

4.

That the penalty order passed by the Learned Assessing Officer is illegal, arbitrary, excessive and contrary to the provisions of the Income-tax Act, 1961.

5.

That the Learned Authorities below have failed to appreciate that mere addition/disallowance in assessment proceedings does not automatically justify levy of penalty.

6.

That the Learned Assessing Officer has failed to record proper satisfaction as required under law before initiation and levy of penalty and therefore the impugned penalty order deserves to be quashed.

7.

That the impugned penalty order has been passed without properly considering the explanation and submissions furnished by the assessee and hence is liable to be deleted.

8.

That the appellant craves leave to add, amend, alter or withdraw any of the above grounds of appeal before or at the time of hearing.” 2. Briefly stated, facts necessary for consideration and adjudication of the issues at hand are: On the basis of assessment framed u/s 147/144 of the Act making addition of Rs. 12,09,516/-. On failure of

I.T.A No. 1389/JPR/2026 Page No 3 Rajni Bala

the assessee to explain the source of such deposit, penalty proceedings u/s 271(1)(c) of the Act were initiated for concealment of income. 3. Assessee carried the matter before the Ld. CIT(A) by way of filing appeal, who has confirmed the penalty levied by the AO by dismissing the appeal. Being aggrieved with the impugned order passed by the Ld. CIT(A), assessee has come up before the Tribunal by way of filing the present appeal. 3. We have heard Ld. ARs for the assessee and Ld. DR for the Revenue and perused the record available on file. 4. Undisputedly, penalty u/s 271(1)(c) of the Act has been levied on the assessee on the basis of assessment framed u/s 147/144 of the Act, on failure of the assessee to furnish corroborative evidence to explain the time deposit of Rs. 12,09,516/- in her bank account, held to be concealed income, assessment was framed u/s 147/144 of the Act. It is also not in dispute that the assessee has filed two appeals one quantum appeal and second appeal challenging the penalty order u/s 271(1)(c) of the Act dated 29.05.2018 before the Ld CIT(A). 5. Ld. AR for the assessee at the very outset contended that Ld. CIT(A) has proceeded to decide/dismiss the penalty appeal without deciding the quantum appeal still pending before the Ld. CIT(A). These facts have not been controverted by the Ld. DR for the Revenue.

I.T.A No. 1389/JPR/2026 Page No 4 Rajni Bala 6. We are of the considered view that when the quantum appeal is pending before the Ld. CIT(A) consequential penalty appeal cannot be decided, as it is based upon the outcome of the quantum appeal. It may be result of some mistake due to over work. Be that as it may, the impugned order passed by Ld. CIT(A) is not sustainable and as such is liable to be set aside to remand back for afresh decision by providing adequate opportunity of being heard to the assessee on decision of the quantum appeal. 7. Resultantly, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 02/11/2026. Sd/- Sd/- (PRAKASH) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Jaipur Dated:- 02/11/2026. *Santosh. Copy of the order forwarded to: 1. The Appellant- 2. The Respondent- 3. CIT 4. CIT(A) 5. DR, ITAT, Jaipur. 6. Guard File By order, Asst. Registrar/Sr.P.S. SANTOSH Digitally signed by SANTOSH KUMAR KUMAR MAURYA Date: 2026.11.02 MAURYA 14:07:19 +05'30'

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