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Facts
The assessee's appeal was dismissed in limine by the First Appellate Authority (FAA) due to a delay of 1064 days without adjudicating on merits. The assessee had also filed a separate appeal regarding quantum assessment which was condoned for a delay of 134 days, and the matter was set aside to the FAA for a fresh hearing on merits. The penalty order in question arises from the quantum assessment.
Held
The Tribunal noted that since the quantum assessment order was set aside by a separate order, the penalty order arising from it cannot be independently sustained. Consequently, the delay in filing the appeal before the FAA is condoned.
Key Issues
Whether the penalty order can be sustained when the underlying quantum assessment order has been set aside by the Tribunal.
Sections Cited
271AAC(1)
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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE K & SHRI INTURI RAMA RAO
आदेश/ O R D E R
PER GEORGE GEORGE K, VICE PRESIDENT:
This appeal filed by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 11.11.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18.
2 -: 2. At the very outset, we notice that the First Appellate Authority (FAA) had dismissed the appeal of the assessee in limine without adjudicating on merits. The FAA held that there is a delay of 1064 days in filing this appeal before him and there is no reasonable cause for condoning the same.
The Ld.AR submitted that as against the quantum assessment, the Tribunal in has condoned the delay of 134 days (after excluding Covid-19 period) and had set aside the matter to the file of FAA to hear the appeal on merits. The Ld.AR submitted that in light of the quantum assessment order being set aside, the impugned penalty order u/s.271AAC(1) of the Act which arise out of the quantum assessment needs to be set aside.
The Ld.DR supported the order of the AO and the First Appellate Authority.
We have heard rival submissions and perused the material on record. The Penalty u/s.271AAC(1) of the Act arises out of quantum assessment. Since, the quantum assessment has already been set aside by the Tribunal to the files of the FAA, this penalty order cannot be independently sustained. Therefore, we deem it appropriate to set aside the issue to the files of the FAA 3 -: (before whom the quantum assessment is pending), after condoning the delay in filing the appeal before the FAA. Hence, the delay in filing the appeal before FAA is condoned and the issue of penalty u/s.271AAC(1) of the Act is restored to the files of the FAA for fresh consideration along with the quantum appeal. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 18th February, 2026 at Chennai.