KAPIL KHANDELWAL,BAREILLY, UTTAR PRADESH vs. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-I, BAREILLY , BAREILLY, UTTAR PRADESH

ITA 335/LKW/2025Status: DisposedITAT Lucknow27 February 2026AY 2015-16Bench: SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SH. NIKHIL CHOUDHARY (Accountant Member)6 pages
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What did the Tribunal hold?

The ITAT noted that the quantum appeal related to the long-term capital gains disallowance had already been remanded back to the CIT(A) for re-adjudication. Given this, the ITAT decided to also restore the penalty proceedings under section 271(1)(c) to the CIT(A) to be decided afresh concurrently with the quantum appeal.

What were the facts?

The assessee claimed exempt long-term capital gains from the sale of shares, which the tax authorities deemed bogus and arising from penny stock transactions. A penalty of Rs. 12,76,132/- was levied under section 271(1)(c) for concealment of income after the exemption claim was disallowed and treated as business income. The CIT(A) upheld this penalty.

What were the issues?

1. Whether the penalty levied under section 271(1)(c) for concealment of income, related to bogus long-term capital gains, was justified. 2. Whether the penalty proceedings should be remanded to the CIT(A) given that the quantum appeal is already remanded for fresh adjudication. 3. Condonation of delay in filing the appeal.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 250,Section 10(38),Section 253(5)

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Income Tax Appellate Tribunal, LUCKNOW ‘B’ BENCH, LUCKNOW

Hearing: 22.01.2026Pronounced: 27.02.2026

PER NIKHIL CHOUDHARY, A.M.: This is an appeal filed by the assessee against the orders of the ld. CIT(A), NFAC under section 250 of the Income Tax Act, 1961, wherein the ld. CIT(A) has confirmed the penalty levied upon the assessee under section 271(1)(c) by the ld. AO on 17.03.2022 and dismissed the appeal of the assessee for the A.Y. 2015-16. The grounds of appeal are as under: - “1. BECAUSE requisite satisfaction for levy of penalty u/s 271(1)(c) if the Income Tax Act 1961 was not recorded in the regular assessment order dated 22.12.2017 passed a/s 100%, therefore, penalty proceedings got wholly vitiated and consequently, the id. "CIT(A)" ought to have quashed the penalty order dated 17.03.2022, being illegal,

The order continues below.

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