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Facts
The assessee, Sri Sai Baba Sansthan, a public charitable trust, filed appeals against penalty orders levied under section 271(1)(c) of the Income Tax Act, 1961, for assessment years 2012-13 and 2013-14. The quantum appeals for these years had previously been remanded to the Ld. CIT(Appeals)/NFAC for de novo adjudication as they were ex-parte orders.
Held
The tribunal held that, following the principles of consistency and completeness, the penalty appeals should also be remanded to the Ld. CIT(Appeals)/NFAC for de novo adjudication. The penalty will only survive if the quantum additions are sustained; otherwise, it will be quashed. This decision was supported by judgments from the Hon'ble Supreme Court and Hon'ble High Court of Delhi.
Key Issues
Whether penalty proceedings initiated under Section 271(1)(c) can be sustained when the underlying quantum assessment has been remanded for de novo adjudication.
Sections Cited
271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM
The captioned appeals preferred by the assessee emanates from the respective orders of the Ld.CIT(Appeals)/NFAC, Delhi dated 30.07.2025 for the assessment years 2012-13 and 2013-14 as per the grounds of appeal on record.
At the very outset, the Ld. Counsel for the assessee submitted that the assessee is a religious public charitable trust engaged in both public welfare activities as well as religious activities. The trust runs separately a temple of Lord Shirdi Sai Baba “Shraddha” “Saburi”, and along with the religious activities, several charitable activities are also conducted as per the memorandum of association and bye-laws of the said trust.
Coming to the merits of the matter, the Ld. Counsel for the assessee submitted that these two cases pertains to A.Ys.2012-13 and 2013-14 regarding penalty levied u/s. 271(1)(c) of the Income Tax Act, 1961 (for short ‘the Act’). It was submitted by the Ld. Counsel that quantum appeal for both the years i.e. A.Y.2012-13 and 2013-14 have been remanded to the file of the Ld. CIT(Appeals)/NFAC since the said orders on quantum were ex-parte. In this context, the Ld. Counsel submitted the copy of order
3 Sri Sai Baba Sansthan Vs. ITO, Exemption-II, Raipur & 541/RPR/2025 & 248/RPR/2025 for A.Ys.2012-13 & 2013-14, dated 03.06.2025.
The Ld. Sr. DR conceded to these facts on record and submissions put forth by the Ld. Counsel for the assessee.
Having heard the parties herein, I am of the considered view that since quantum appeals of the assessee have been remanded back to the file of the Ld. CIT(Appeals)/NFAC, therefore, following the principles of consistency and for completeness of the matters, it would be all the more appropriate that the penalty appeals should also be restored to the file of the Ld. CIT(Appeals)/NFAC. My aforesaid view in restoring the penalty to the Ld. CIT(Appeals)/NFAC is fortified by the judgment of the Hon’ble Supreme Court in the case of Mohd. Mohatram Farooqui vs. CIT (SC) 2010-TIOL-23-SC-IT wherein it has been held that if addition is restored to the A.O, then penalty should also be restored. Also, the Hon’ble High Court of Delhi in the case of Sanjay Gupta Vs. CIT (2014) 366 ITR 18 (Del) has also held that where the quantum has been remanded to the A.O, the question of penalty on account of the said amount being treated as undisclosed income, should also be remanded to the A.O. In the present case before me the concerned authority however shall be Ld. CIT(Appeals)/NFAC since the quantum has been remanded back to its file for denovo adjudication.
4 Sri Sai Baba Sansthan Vs. ITO, Exemption-II, Raipur & 541/RPR/2025
In view of the aforesaid facts, I set-aside the respective orders of the Ld. CIT(Appeals)/NFAC and remand the matters back to its file for denovo adjudication. The Ld. CIT(Appeals)/NFAC shall first deal with quantum appeals and if the additions or part addition are sustained then only shall the penalty survive. In case, the substantive additions are deleted completely then penalty shall automatically have no legal sustainability separately and shall have to be quashed.
As per the above terms grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, both the appeals of the assessee are allowed for statistical purposes.
Order pronounced in open court on 24th day of September, 2025.