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Facts
The assessee appealed against NFAC orders confirming penalties under sections 270A and 271AAC for AY 2018-19. These penalties stemmed from an assessment where the sale of rural agricultural land was treated as under-reported income, an issue which the assessee contested as not being a capital asset. A prior ITAT order had already set aside the quantum assessment to the Assessing Officer for fresh consideration.
Held
Given that the fundamental assessment order leading to the penalties was previously set aside to the Assessing Officer (AO) for fresh determination, the Tribunal found it appropriate to also remand the penalty issues under sections 270A and 271AAC back to the AO. The ultimate decision on penalties is contingent upon the outcome of the fresh quantum assessment.
Key Issues
1. Sustainability of penalties under sections 270A and 271AAC when the quantum assessment is set aside for fresh adjudication. 2. Classification of rural agricultural land sale as a capital asset under section 2(14) and its implications on income and penalty.
Sections Cited
270A, 271AAC(1), 144, 147, 250, 2(14)
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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: Ms. Suchitra Kamble & Shri Narendra Prasad Sinha
आदेश/ORDER Per Suchitra Kamble, Judicial Member:
These both the appeals are filed against the orders both dated 25-08-2025 & 06-08-2025 respectively passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2018-19.
The grounds of appeals are as under:-
“1 Learned CIT(A), NFAC had erred in dismissing appeal by appellate order dt. 25-08-2025 of assessee against Penalty order u/s 270A of the Act. In as much as, i. Quantum appeal against order of A.O. u/s 144 r.w.s 147 of the Act is set aside to A.O. for fresh order by Hon. ITAT in dt. 22-05-2025.
& 2048/Ahd/2025 Chudaji Thakor, A.Y. 2018-19 ii. Ld. CIT(A) had not considered the reply of assessee dt. 25-08- 2025 to Notice u/s 250 of the Act fixing hearing on 25-08-2025. Assessee stated that quantum appeal is set aside by Hon. ITAT & order of Hon. ITAT was also sent to Ld. CIT(A), NFAC.
2 Learned CIT(A), NFAC had erred in treating sale of rural agricultural land as under reporting of income. In as much as, sale of agricultural land is not capital asset u/s 2(14) of the Act.
3 Learned CIT(A), NFAC had erred in treating sale of rural agricultural land in A.Y.-2018-19 whereas sale of rural agricultural land is A.Υ.- 2019-20.”
-Ahd-2025 “1 Learned CIT(A), NFAC has erred in confirming Penalty of Rs.2,94,000 levied by A.O. In as much as, Ld. CIT(A) has confirmed Penalty on the ground that Ld. CIT(A), NFAC had dismissed quantum appeal of assessee against order of A.O. u/s 144 r.w.s. 147 of the Act. However, Hon. ITAT had set aside order of Ld. CIT(A), NFAC to A.O. for fresh assessment in dt. 22/05/2025.
2 Learned CIT(A), NFAC has erred in confirming Penalty u/s 271AAC(1) of the Act. In as much as, Ld. A.O. had taxed sale of Rural Agricultural Land which is not capital assets u/s 2(14) of the Act. LTCG is exempt. There is no question of Penalty.
3 Learned CIT(A), NFAC has erred in confirming Penalty u/s 271AAC(1) of the Act. In as much as, the sale of Rural Agricultural land is in A.Y.-2019-20. No Penalty can be levied in A.Y.-2018-19.”
3 The ld. A.R. submitted that in the quantum appeal of the said assessee for the same assessment year 2018-19 where the penalty u/s. 270A & 271AAC of the Act was initiated is remanded back to the file of the Assessing Officer by the Tribunal vide order dated 22ndMay, 2025 (ITA 301/Ahd/2025). Therefore, the ld. A.R. submitted that the matter may be disposed off accordingly.
& 2048/Ahd/2025 Chudaji Thakor, A.Y. 2018-19 4. The ld. D.R. relied upon the assessment order and the order of the penalty as well as CIT(A).
We have heard both the parties and perused all the material available on record. It is pertinent to note that the very inception of the assessment order which was passed in the assessee’s case on the basis quantum addition, the same was set aside to the file of the Assessing Officer for the reasons stated in para 7 of the said order dated 22nd May, 2025 passed by the Tribunal. Therefore, it will be appropriate to remand back this issue of penalty u/s. 270A and 271AAC of the Act to the file of the Assessing Officer in respect of the direction. The appeals of the assessee in both the cases will have to be decided in consonance with the direction of the Assessing Officer passed in the remand back the matter. Therefore, the appeals of the assessee are partly allowed for statistical purpose.
In the result, both the appeals of the assessee are partly allowed for statistical purpose.