SINGARAVEL RAJA,VILLUPURAM vs. ITO, WARD-1,, VILLUPURAM

The assessee is an individual and has not filed the return of income for the relevant assessment year. The A.O, on the basis of information that the assessee had made cash deposits of Rs.22,35,000/- and time deposits of Rs.49,50,000/- in VDCC and KVB, Ulundurpet, reopened the assessment. The A.O thereafter completed the assessment u/s. 147 of the Act and made an addition of Rs.71,90,000/- under section 69A of the Act, as the assessee had failed to explain the nature and source of the deposits. The A.O also initiated penalty proceedings u/s. 271(1)(c) of the Act for concealment of income and furnishing of inaccurate particulars thereof. Since the assessee did not comply with the notices issued, the A.O levied a penalty of Rs.21,64,916/- under section 271(1)(c) of the Act. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A). However, the Ld. CIT(A) dismissed the appeal ex-parte on the ground that the assessee had neither filed the return of income nor paid the amount equal to the advance tax payable, and accordingly held the appeal to be infructuous. 3. The Learned Authorized Representative (Ld. A.R) submitted before us that the assessment order, based on which the penalty was levied, has been restored to the file of the A.O for denovo assessment Singaravel Raja

The Learned Departmental Representative (Ld. D.R) relied on the orders of the lower authorities and requested that the appeal be dismissed.

We have heard the rival submissions and perused the materials available on record. The A.O had levied a penalty of Rs.21,64,916/- under section 271(1)(c) of the Act for concealment of particulars of income. The Ld. CIT(A) dismissed the appeal as not maintainable. We note that the assessment order, based on which the penalty was levied, has been set aside by the Coordinate Bench of the Tribunal in ITA No. 601/Chny/2024 vide order dated 29.05.2024, with a direction to the A.O to frame the assessment afresh. Once the very basis of the penalty i.e., the original assessment order has been set aside, the penalty levied thereon cannot survive. The A.O will, however, be at liberty to reinitiate penalty proceedings, in the fresh assessment Singaravel Raja