DEPUTY COMMISSIONER OF INCOME TAX, EXEMPTIONS CIRCLE, COIMBATORE vs. UTHANGARAI SRI VIDYA MANDIR EDUCATIONAL AND SOCIAL WELFARE TRUST, KRISHNAGIRI

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ITA 2094/CHNY/2025Status: DisposedITAT Chennai22 September 2025AY 2014-15Bench: SHRI MANU KUMAR GIRI (Judicial Member), SHRI S.R. RAGHUNATHA (Accountant Member)1 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the CIT(A) was correct in setting aside the penalty order and directing the AO to re-levy the penalty after due verification of facts. The penalty was based on additions that were subsequently partly allowed in favour of the assessee.

What were the facts?

An appeal was filed against the order of CIT(A) for AY 2014-15. The assessee, a trust, had its assessment concluded u/s 153A after a search. Subsequently, a penalty was levied u/s 271AAB(1). The assessee appealed the penalty to CIT(A).

What were the issues?

Whether the CIT(A) erred in setting aside the penalty order and directing the AO to re-verify facts, considering the quantum appeal was partly allowed.

Which sections of the Income-tax Act were involved?

Section 153A,Section 271AAB(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI

Before: SHRI MANU KUMAR GIRI & SHRI S.R. RAGHUNATHA

For Respondent: Ms. Anitha, Addl. CIT
Hearing: 17.09.2025Pronounced: 22.09.2025

आदेश /O R D E R

PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:

1.

This appeal by the assessee is filed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2014-15, vide order dated 26.05.2025.

:-2-: ITA. No:2094 /Chny/2025 2. The assessee is the trust created on 23.03.1987 with the objective run school named Sri Vidya Mandir Matriculation Higher Secondary School and student hostel at Uthangarai. Consequent to the search proceedings notices u/s.153A of the Act was issued for six assessment years for the A.Y relevant to the previous year which search was conducted. The assessment for A.Y.2014-15 was concluded u/s.153A of the Act by making certain additions. On appeal by the assessee before the ld.CIT(A), the order of the AO was partly allowed. Later, the AO issued a notice u/s.271AAB(1) of the Act was issued and the penalty of 90% of the tax was levied i.e., Rs.1,32,58,460/- by passing an order dated 27.01.2022.

3.

Aggrieved by the penalty order of the AO, the assessee preferred an appeal before the ld.CIT(A), NFAC on 20.12.2023.

4.

The quantum appeal filed by the assessee before this Tribunal against the order of the ld.CIT(A) has been partly allowed in favour of the assessee by giving a relief of Rs.6.74 Crores on various accounts and addition of Rs.2.53 Crores was upheld. In respect of the same the AO passed an order giving effect on 16.07.2024. Based on the fact of the case the ld.CIT(A) by following the various decisions of Hon’ble Courts set aside the penalty order of the AO by directing the AO to levy the penalty after due verification of the facts as per provisions of law.

5.

Aggrieved by the penalty order of the ld.CIT(A) dated 26.05.2025, the revenue preferred an appeal before us.

:-3-: ITA. No:2094 /Chny/2025

6.

The ld.DR submitted that the ld.CIT(A) has erred by directing the AO to “levy penalty after due verification of the facts,” is not, in substance in effect, an order of ‘set aside’ for fresh adjudication, a power that is not available to ld.CIT(A) under the provisions of the Act, hence prayed for confirming the penalty levied by the AO.

7.

Per contra, the ld.AR submitted that the ld.CIT(A) has rightly set aside the penalty order of the AO. Since the penalty was levied based on the outcome of the order of ld.CIT(A) which has been subsequently partially allowed in favour of the assessee by this Tribunal. Therefore, the quantum of penalty levied based on the ld.CIT(A) order is not tenable in law and hence the ld.CIT(A) rightly sent back to AO for verification of facts and to levy penalty as per provisions of law.

8.

We have heard the rival parties and perused the material available on record and gone through the orders of the lower authorities. We note that the AO has passed a penalty order dated 27.01.2022 by levying a penalty of Rs.1,32,58,460/- u/s.271AAB(1) of the Act based on the additions confirmed by the ld.CIT(A). However, we note that the quantum order was challenged by the assessee before this Tribunal and the same was partly allowed in favour of the assessee by giving a relief of Rs.6.74 Crores on various accounts and addition of Rs.2.53 Crores was upheld. In respect of the same the AO passed an order giving effect on 16.07.2024. Accordingly,

:-4-: ITA. No:2094 /Chny/2025 the penalty levied by the AO u/s.271AAB(1) of the Act in proportion to the additions sustained by the ld.CIT(A) is not correct and the ld.CIT(A) by following the various decisions of Hon’ble Courts set aside the penalty order of the AO by directing the AO to levy the penalty after due verification of the facts as per provisions of law.

9.

In view of the above we are of the considered view that there is no error in the decision taken by the ld.CIT(A) by setting aside the penalty order of the AO and directing the AO to levy the penalty after due verification of the facts stated by the assessee as per provisions of law. Therefore, we are dismissing the grounds of appeal raised by the revenue by upholding the order of the ld.CIT(A).

10.

In the result, appeal filed by the revenue is dismissed.

Order pronounced in the open court on 22nd September, 2025 at Chennai.

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