SARVAM DEVELOPERS,VADODARA vs. INCOME TAX OFFICER, WARD 1 (2) (2), VADODARA

PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the assessee against the order of National Faceless Appeal Centre, Delhi (in short ‘the CIT(A)’), dated 26.11.2024, in respect of order under section 270A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2017- 18. 2. The brief facts of the case are that the assessee had filed its return of income for AY 2017-18 on 02.10.2017 declaring total income of Rs.12,22,520/-. The case was selected for scrutiny under CASS. In the course of assessment, no compliance was made by the assessee. The assessment was completed ex-parte u/s 144 of the Act on 10.12.2019 at total income of Rs. 86,05,048/-. In the course of assessment various additions were made and the AO had also initiated penalty proceeding under section 270A of the Act. Thereafter, a separate penalty order u/s 270A of the Act was passed on 29.01.2022 imposing penalty of Rs.9,55,200/- on the assessee. 3. Aggrieved with the penalty order of the AO, the assessee had filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was partly allowed. 4. Now the assessee is in appeal before us. The following grounds have been taken by the assessee in this appeal: - “1. Whether on the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals-NFAC) was justified in imposing penalty on addition of Rs.17,95,110/- which is made on estimate basis. 2. Whether on the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals-NFAC) was justified in imposing penalty on addition of Rs.17,95,110/- made on estimate basis without waiting for completion of appellate proceedings pending in case of principle demand/addition. 3. Whether on the facts and circumstances and in law, the Ld. Commissioner of Income Tax (Appeals-NFAC) was justified in imposing penalty on addition of Rs.17,95,110/- made on estimate basis where speaking order has not been passed by the Ld. Commissioner of Income-tax (Appeals) as NO justification is provided for imposing penalty. 4. Whether on the facts and circumstances and in law, the Ld. Commissioner of Income Tax (Appeals-NFAC) was justified in imposing penalty on addition of Rs.17,95,110/- on estimate basis where the appellant had provided complete justification with supporting to establish the principle addition made is bad in facts and law during the appellate proceedings state. 5. Whether on the facts and circumstances and in law, the Ld. Commissioner of Income Tax (Appeals-NFAC) was justified in imposing penalty on addition of Rs.17,95,110/- on estimate basis where the appellant was prevented by sufficient cause to produce evidence during the assessment proceedings.” 5. Shri Karsan Shah, Ld. AR of the assessee submitted that the assessee had preferred an appeal against the assessment order passed u/s 144 of the Act dated 10.12.2019, which was decided by the Ld. CIT(A) vide 0rder dated 29.03.2025 and the matter was set aside to the AO with a direction to make fresh assessment. He submitted that when the assessment order was set aside the additions made by the AO did not survive. Therefore, the Ld. CIT(A) was not correct in confirming the penalty u/s 270 A of the Act in respect of the additions which were no longer in existence. 6. Per contra, Shri Abhijit, the Ld. Sr. DR Submitted that the penalty matter may also be restored to the file of AO considering that the assessment order was set aside to the file of AO by the Ld. CIT(A). 7. We have considered the rival submissions. The penalty u/s 270A of the Act was initiated in the course of assessment proceeding completed u/s 144 of the Act dated 10.12.2019. The assessee had filed an appeal against the said order which was decided by the Ld. CIT(A) vide order dated 29.03.2025 and the assessment order was set aside to the file of the AO for making a fresh assessment. When the assessment order itself was set aside, the additions made in the said order does not survive. Therefore, no penalty could have been imposed or confirmed in respect of the additions made in the assessment order, which is no longer in existence. In view of this fact the order of the Ld. CIT(A) dated 26.11.2024 whereby the penalty imposed u/s 270A of the Act was partly upheld, cannot be held as correct. We, therefore, quash the order of Ld. CIT(A) dated 26.11.2024 partly confirming penalty under section 270A of the Act. will be free to re-initiate the penalty proceeding under section 270A of the Act while completing the fresh assessment, if so required. 8. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on this 28th July, 2025. (SUCHITRA KAMBLE) Accountant Member

Ahmedabad, the 28th July, 2025
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The CIT(A)

(5)
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