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Facts
The assessee challenged an order confirming a penalty. A previous appeal concerning the quantum assessment had been set aside by the Tribunal for de novo adjudication. The assessee argued that the penalty appeal should also be remanded for de novo consideration.
Held
The Tribunal held that the penalty appeal should be set aside and restored to the file of the Ld.CIT(A) for de novo adjudication, to be decided after the quantum appeal is adjudicated.
Key Issues
Whether the penalty appeal should be set aside and remanded for de novo adjudication in light of the quantum appeal being restored for de novo adjudication.
Sections Cited
143(3), 69, 40A(3), 251(2), 271AAC, 270A
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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI S.R.RAGHUNATHA
आदेश / O R D E R
PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 31.03.2025 for the Assessment Year (hereinafter referred to as "AY”) 2017-18 confirming the penalty levied by the AO.
At the outset, the Ld.AR of the assessee brought to our notice that the appeal filed by the assessee against the action of the Ld.CIT(A)
1. confirming the quantum assessment order passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) dated 29.12.2019 had come up before this Tribunal in for AY 2017-18 in the case of Shamimullah v. ITO and by order dated 29.05.2025, this Tribunal had set aside the same back to the file of the Ld.CIT(A)/NFAC for de novo action to decide the issues raised by the assessee after considering the written submissions/documentary evidences filed by the assessee. Therefore, he prayed that the penalty confirmed by the Ld.CIT(A) arising from the quantum assessment may also be set aside back to the file of the Ld.CIT(A) for de novo action after the appeal preferred by the assessee against the quantum assessment has been decided as per the order of this Tribunal dated 29.05.2025.
Per contra, the Ld.DR didn’t oppose the plea of the assessee.
Having heard both the parties and after perusal of the records, it is noted that the assessee had filed return of income (RoI) on 15.12.2017 for AY 2017-18 declaring total income at ₹3,72,390/- which underwent scrutiny; and the AO is noted to have passed assessment order u/s.143(3) of the Act dated 29.12.2019 by making addition u/s.69 of the Act [in respect of SBNs deposited during demonetization] and disallowance u/s.40A(3) of the Act to the tune of ₹35,34,239/- since the assessee has made payments in excess of ₹20,000/- to a person otherwise by way of account payee cheque or bank draft. The assessee is noted to have filed an appeal before the Ld.CIT(A) wherein the Ld.CIT(A)/NFAC by order dated 21.05.2024 has not only confirmed but also enhanced quantum assessment u/s.251(2) of the Act in respect of disallowance u/s.40A(3) of the Act by passing the first appellate order dated 29.05.2024. The assessee is noted to have filed an appeal before this Tribunal assailing the action of the Ld.CIT(A) to be in violation of natural justice since the order of the Ld.CIT(A) was ex parte order qua assessee. The Tribunal by order dated 29.05.2025 was pleased to set aside the quantum appeal back to the file of the Ld.CIT(A) for de novo adjudication.
Meanwhile, after the AO came to know about the Ld.CIT(A)’s action dated 21.05.2024, he initiated penalty u/s.271AAC of the Act and levied penalty of ₹90,243/- by order dated 27.09.2024. At the same time, the Ld.CIT(A)/NFAC has suo moto noted to have initiated penalty u/s.270A of the Act and levied penalty of ₹11,83,968/- vide order dated 31.03.2025.
The impugned penalty order of the Ld.CIT(A)/NFAC dated 31.03.2025 is assailed on the ground that since the appeal against the quantum assessment has been restored back to the file of the Ld.CIT(A) for de- novo adjudication, the penalty appeal also may be set aside back to the file of the Ld.CIT(A) for de novo penalty action after the appeal against the quantum assessment has been adjudicated. We find force in the submissions of the Ld.AR and therefore, we set aside the impugned order of the Ld.CIT(A) dated 31.03.2025 levying penalty u/s.270A of the Act and restore the penalty appeal back to the file of the Ld.CIT(A) with a direction to adjudicate the same after adjudicating the quantum appeal as directed by this Tribunal vide order dated 29.05.2025. The assessee is directed to file relevant documents/written submissions before the Ld.CIT(A) and the Ld.CIT(A) to decide the penalty appeal in accordance to law after hearing the assessee.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on the 13th day of October, 2025, in Chennai.