RANJIT PATHAK,MUMBAI vs. DCIT CIRCLE 42(3)(1), MUMBAI

PER OM PRAKASH KANT, AM

These two appeals by the assessee are directed against two separate orders, both dated 30.05.2025 passed by the Ld.
Commissioner of Income-tax (Appeals) – National Faceless Appeal
Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2016-
17, in relation to penalty levied u/s 271(1)(b) and section 271(1)(c) of the Income-tax Act, 1961 (in short ‘the Act’) respectively. As both the appeals being connected with the single assessee, same were heard together and d for the sake of conven
2. Briefly stated, t not file his regula consideration. The information through received salary of R towards credit card return of income had that income charge accordingly reopened
Section 148 of the Ac
2.1 Despite service
Section 142(1) of th assessee. The ld AO under Section 144 d complied. Consequen parte under Section an addition of Rs.5
under Section 271(1)
AO also initiated pen of the notices issue
23.12.2021, 04.02.20
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disposed off by way of this con nience.
the facts of the case are that t ar return of income for th
Assessing Officer (hereinafter the Income-tax portal that th
Rs.50,32,283/- and had incurr bills amounting to Rs.5,64,8
d been filed, the AO recorded re eable to tax had escaped a d the assessment by issuance ct.
e of various statutory notices he Act, there was no compli
O thereafter issued a final sho dated 19.03.2022, which also ntly, the ld AO completed the r
147 read with Section 144 of th
5,97,095/- and initiated pena
(c) of the Act for concealment of nalty u/s 271(1)b) of the Act for ed u/s 142(1) of the Act dat
022 and 15.02.2022. Ranjit Pathak
2
101 & 4102/MUM/2025
nsolidated order he assessee did he year under “AO”) received he assessee had red expenditure
812/-. Since no asons to believe assessment and of notice under s issued under iance from the ow cause notice remained non- reassessment ex he Act and made alty proceedings f income. The ld non-compliance ted 17.08.2021,

vide separate orders, the AO le
Section 271(1)(b) dated ach of the four defaults) a er Section 271(1)(c) dated 27.09. preferred an appeal against dated 26.03.2022 before the ld irst Appellate Authority, upon ting that fresh evidences had b ch were not before the AO, ex o Section 251(1)(a) of the Act et aside the reassessment orde th Section 144 of the Act, resto esh adjudication in accordance principles of natural justice.The d. First Appellate Authority is on: The grounds of appeal, assessmen s of the appellant and the relevant ents have been carefully consider the grounds of appeal filed by the ap ed as under.
the course of appellate proceedin submitted fresh details which we fore the Assessing officer during the c proceedings.
Therefore, the s/detailssubmitted by the appellant d to verify the genuineness of his claim
Ranjit Pathak
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101 & 4102/MUM/2025
evied penalty of 16.09.2022(i.e., and penalty of .2022. the quantum d First Appellate considering the been filed at the xercised powers and, vide order er passed under oring the matter with law and in relevant finding reproduced as nt order, judicial red and ppellant ngs, the ere not courseof above need to m.

esent appeal challenges an assessme the AO under Section 144 of the Inco he amended provisions of Section 25
Act, it is stipulated that in cases gainst an order of assessment under Commissioner (Appeals) is vested w set aside such assessment and re to the Assessing Officer for making dingly, in the interest of upholdi f natural justice, and exercising the upon the Commissioner of ) underproviso to section 251 (1)(a) of et aside the impugned assessmen
147 r.w.s 144 of the Act to the file of ssessment after examining the said y the appellant.
O is directed to decide the matter as f Income-Tax Act after giving due opp ard to the appellant in accordance w f natural justice. The assessment is th o the file of AO to make assessment e with law.”
also preferred appeals before y of penalties under Sections
The ld CIT(A), taking note of th ment order itself stood set aside r Section 250 in penalty appea er, in the concluding part of h bserved that the appeals stood
. The relevant finding of the impugned orders and therefore
Ranjit Pathak
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nt order ome-Tax
51 of the s where r Section with the efer the a fresh ing the powers
Income- f the Act, nt order f the AO details per the portunity with the herefore t afresh the ld CIT(A) s 271(1)(b) and he fact that the e, held that the als had become his order, the ld d “dismissed for e Ld. CIT(A) is , for brevity, the order of the Ld. CIT(A is reproduced as und
“2.1. Vide or order u/s 1
AO. Hence t longer vali statistical p
3. We have heard material on record.
concerned, in the p inextricably linked to set aside in-toto by t natural justice and very proceedings in setaside and remitte earlier non-complian objective—namely, t participative reassess have consistently he stand when its subst
3.1 We also note infructuousness of consequent upon the in the last line by “
internally inconsiste
ITA No. 41

A) in relation to penalty u/s 271
der:
rder dated 08/11/2024 the original as 47 r.w.s 144 has been set aside to he notice u/s 250 is infrutuous and b d.
Hence, the appeal is dism urpose.”
the rival contentions and perus
As far as penalty u/s 271(1)( resent case, the alleged non-c o an assessment proceeding th the ld First Appellate Authority for consideration of fresh mat n which the defaults are alle ed for a fresh start, sustainin nce would be incongruent with to wipe the slate clean and sment. In such a situation, the eld that the superstructure of tratum has been removed.
that the ld CIT(A) himself the notices issued for p e setting aside of the re-assessm
“dismissing for statistical purp ent with his own reasoning.
Ranjit Pathak
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101 & 4102/MUM/2025
1(1)(b) of the Act ssessment the file of become no missed for sed the relevant
(b) of the Act is compliances are hat now stands y for violation of terial. Once the eged have been ng a penalty for h the remand’s ensure a fair,
Hon’ble Courts penalty cannot recognised the enalty appeals ment, but erred poses,” which is Therefore, the correct disposition, i levied under section the AO to take recou the remanded procee
3.2 As far as pen concerned, it is lev inaccurate particula assessment findings aside, the factual a disappears. The Hon
265 ITR 562 (SC), forming the basis of survive.
3.3 Applying K.C.
Section 271(1)(c) can
Section 271(1)(b), wh rendered otiose by substantive outcome to set aside the pena afresh, if warranted, to the ld CIT(A)’s rem then stands. We orde
4. In view of the fo
ITA No. 41

in law and on logic, is to del
271(1)(b) of the Act, while rese urse to law if fresh, non-compl edings.
nalty under section 271(1)(c) vied for concealment of incom ars of income as a conseq
. Where the assessment findi and legal edifice on which th n’ble Supreme Court in K.C. B held that when the additio the penalty are obliterated, the Builders (supra), the present nnot be sustained at this stage. H hich addressed a past procedu the remand, Section 271(1)(c of assessment, therefore, the p lty order to the file of the AO to upon completion of the reassess mand and strictly in accordanc er accordingly.
oregoing discussion, we conclude
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lete the penalty erving liberty to liance occurs in of the Act is me/furnishing of quence of the ing itself is set e penalty rests
Builders v. ACIT, ons/assessment e penalty cannot penalty under However, unlike ural default now c) concerns the proper course is be re-examined sment pursuant e with law as it e that (i)
The appeal succeeds. Th the AO shall event of defau
(ii)
The appeal allowed for st order dated restored to th completion o
CIT(A)’s orde opportunity t
(iii) The impugne notices for p nonetheless terms to refle
5. Accordingly, the appeals are allowed.
6. In the result, bo
Order pronoun (SAKTIJIT
VICE PRES
Mumbai;
Dated: 28/08/2025
Rahul Sharma, Sr. P.S.
ITA No. 41

against penalty under Se he penalty of Rs. 40,000/- is de l be at liberty to initiate penalt ult in the remand proceedings.
against penalty under Sectio tatistical purposes in the sense
27.09.2022 is set aside and he AO to reconsider, if necessar of the reassessment in pursu er dated 08.11.2024, and afte to the assessee.
ed orders of the ld CIT(A) rec penalty appeals had become i
“dismissing” them, are modifie ect the correct legal consequence e grounds raised by the asses oth the appeals of the assessee a ced in the open Court on 28/0
/-
T DEY)
(OM PRAK
SIDENT
ACCOUNTA
Ranjit Pathak
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ction 271(1)(b) eleted. However, ty afresh in the on 271(1)(c) is that the penalty d the matter is ry, de novo after uance of the ld er granting due ording that the infructuous but ed in the above e.
see in both the are allowed.
08/2025. KASH KANT)
ANT MEMBER

Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.

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ITA No. 41

ded to :

BY ORDER

(Assistant Re

ITAT, Mu

Ranjit Pathak
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R, gistrar) umbai