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Facts
The assessee's appeal arises from an order confirming a penalty of Rs. 1,75,615/- levied under Section 271(1)(c) of the Income Tax Act, 1961. The penalty proceedings were conducted ex parte before the Assessing Officer and the CIT(A) also confirmed the penalty.
Held
The Tribunal held that the penalty was levied without affording a proper opportunity of being heard to the assessee. Moreover, since the quantum appeal was still pending before the CIT(A), there was no reason for the penalty to survive for adjudication.
Key Issues
Whether the penalty levied under Section 271(1)(c) is sustainable when proper opportunity of hearing was not granted and the quantum appeal is pending.
Sections Cited
271(1)(c), 250
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Income Tax Appellate Tribunal, DELHI BENCH BNEW DELHI
Before: SHRI MAHAVIR SINGH, HONBLE & SHRI SANJAY AWASTHI
सुनवाईक�तारीख/ Date of hearing: 16.12.2025 02.01.2026 उ�ोषणाक�तारीख/Pronouncement on आदेश /O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
The present appeal arises from order dated 02.06.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”) by the Ld. CIT(A)-NFAC, Delhi. In this case, the Ld. AO has levied a penalty u/s 271(1)(c) of the Act to the extent of Rs.1,75,615/-. It is seen that the penalty proceedings before the Ld. AO were conducted in an ex parte manner. It is further seen that before the Ld. CIT(A) also the averments of the assessee have been negated and after discussing a number of authorities the Ld. CIT(A) has confirmed the said penalty on the ground that the source of cash, as explained by the assessee, was not held to be adequate. The penalty was thereby confirmed.
1.1 Aggrieved with this action, the assessee has approached the ITAT with as many as five grounds of appeal, which all challenge the penalty imposed.
2. On the last date of hearing none attended on behalf of the assessee, but it was decided to proceed ahead with the adjudication with the help of Ld. DR. Before us, the Ld. DR stated that the assessee was earning meagre amounts as a self-employed person. It was pointed out that this penalty has been levied even when the quantum appeal is still pending before the Ld. CIT(A). The Ld. DR relied on the order of the authorities below.
3. We have carefully considered the submissions of Ld. DR and have gone through the records before us. It is readily observable that the impugned penalty has been levied without affording proper opportunity of being heard. Furthermore, once the quantum addition is still pending before the Ld. CIT(A) then there is no reason why the present penalty should survive for adjudication. We accordingly set aside the impugned order and remand the same back to the file of the Ld. CIT(A) for consideration of the penalty along with the quantum matter. Needless to say, the penalty would be under remission till such time that the quantum matter is decided.
In the result, the appeal is allowed for statistical purpose.
Order pronounced in the open court on 02.01.2026