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Subramanian Sudhakar Thiagarajan… vs ITO | s.271(1)(c), 148 | ITAT Chennai 2026 | BharatTax

SUBRAMANIAN SUDHAKAR THIAGARAJAN,MADURAI vs. ITO, NCW-1(3), MADURAI

ITA 2649/CHNY/2025Status: DisposedITAT Chennai02 January 2026AY 2013-14Bench: the Hon'ble Madras High Court [against the action of the AO reopening the1 pages

AI SummaryAllowed

Facts

The assessee is appealing against an ex-parte penalty order imposed under section 271(1)(c) of the Income Tax Act, 1961, confirming a penalty of ₹51,89,338. This penalty was based on an assessment order dated 19.03.2022, which included an addition of ₹1,73,60,640 for unexplained cash deposits.

Held

The Tribunal noted that the assessee has filed a Writ Petition before the Hon'ble Madras High Court challenging the validity of the assessment order, which is the foundation of the penalty. Since the assessment order's validity is pending, the Tribunal set aside the ex-parte penalty order of the Ld.CIT(A) and restored it to his file.

Key Issues

Whether the penalty appeal can be adjudicated when the underlying assessment order, which forms the basis of the penalty, is under challenge before the High Court?

Sections Cited

271(1)(c), 148, 144, 69A, 226

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & SHRI JAGADISH

Hearing: 20.11.2025Pronounced: 02.01.2026

आदेश / O R D E R

PER ABY T. VARKEY, JM:

1.

1. 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 04.08.2025 for the Assessment Year (hereinafter referred to as "AY”) 2013-14.

2.

At the outset, the Ld.AR of the assessee brought to our notice that this appeal has been preferred by the assessee against the ex-parte action of the Ld.CIT(A) confirming the penalty levied u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as "the Act”), wherein, he has imposed penalty levied by AO of ₹51,89,338/-. According to the Ld.AR, the penalty was pursuant to assessment order passed on 19.03.2022, wherein the AO after reopening of assessment made an addition of ₹1,73,60,640/- towards unexplained cash deposits. In this context, the Ld.AR brought to our notice that the assessee had filed WP (Registration No. WP (MD) 24827/2022) on 31.10.2022 before the Hon’ble Madras High Court [against the action of the AO reopening the assessment, and then, framing the assessment order dated 19.03.2022], which is pending before the Hon’ble High Court. According to the assessee, the assessment order dated 19.03.2022, was the foundation on the basis of which the AO had initiated and levied impugned penalty; and since, the validity of reopening of assessment order itself is still pending before the Hon’ble High Court, the Ld.AR prayed that ex parte impugned action of the Ld.CIT(A) may be restored back to the file of the Ld.CIT(A)

1.

with a direction to await the decision of the Hon’ble Madras High Court in the assessee’s own case (supra). The aforesaid contention of the assessee couldn’t be controverted by the Ld.DR. However, he submitted that the assessee neither appeared before the AO nor before the (AY 2013-14) Subramanian Sudhakar Thiagarajan :: 3 ::

3.

Having heard both the parties and after perusal of the records, we note that the AO reopened the assessment of the assessee for AY 2013- 14 and noted that the assessee didn’t file return for the relevant assessment year. Having noted that there was cash deposits of ₹1,73,60,640/- in the savings bank account of the assessee and the assessee didn’t file any RoI, the AO reopened the assessment after recording the reasons for reopening and then, issued notice on 30.03.2021 u/s.148 of the Act. The AO is noted to have issued statutory notices on various dates, and thereafter issued notice u/s.144 of the Act dated 04.02.2022 and finding no response from the assessee, had framed assessment by adding ₹1,73,60,640/- u/s.69A of the Act vide assessment order dated 19.03.2022. Thereafter, the AO is noted to have issued penalty notice u/s.271(1)(c) of the Act dated 19.03.2022 which was also not replied by the assessee. Therefore, the AO is noted to have imposed penalty of ₹51,89,338/- by order dated 14.09.2022. On appeal, the Ld.CIT(A) noted that the assessee despite being given five (5) notices didn’t bother to file or upload any response and therefore, the Ld.CIT(A) dismissed the grounds of appeal raised by the assessee and thus confirmed the penalty imposed on him. Hence, the assessee is before us (AY 2013-14) Subramanian Sudhakar Thiagarajan and brought to our notice certain developments which have an impact on the adjudication of penalty appeal. The assessee has brought to our notice that he has filed Writ Petition (WP) under Article 226 of the Constitution of India praying to quash the assessment order dated 19.03.2022 passed u/s.144/147 of the Act for AY 2013-14 on the basis that the reopening the assessment is invalid/bad in the eyes of law. We note from perusal of the case details filed in the ibid WP (supra), the assessee had filed the WP on 31.10.2022 and given registration No. WP (MD) 24827/2022 and the official website of the Hon’ble Madras High Court have shown the case status to be pending. In such a scenario, the prayer of the assessee is that the impugned ex parte penalty order may be restored back to his file to await the decision of the Hon’ble Madras High Court filed against quantum assessment on 19.03.2022 which is the foundation of impugned penalty. We find considerable force in the submission of the Ld.AR and further, taking note that the impugned order of the Ld.CIT(A) is an ex parte order qua assessee, we set aside the impugned order of the Ld.CIT(A) and restore the penalty appeal back to his file with a direction to await the outcome of the WP filed by the assessee against the quantum assessment order dated 19.03.2022 supra.