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Facts
The assessee filed an appeal against the order of the CIT (Appeals) confirming a penalty imposed by the AO under section 271(1)(c) of the Income Tax Act. The assessee's counsel argued that the quantum appeal against the additions is still pending and therefore, the penalty appeal cannot be adjudicated.
Held
The Tribunal held that the penalty appeal cannot be adjudicated as the quantum issues are yet to be determined by the CIT (Appeals). The Tribunal set aside the order of the CIT (Appeals) and relegated the issue to the CIT (Appeals) for fresh adjudication after the quantum appeal is decided.
Key Issues
Whether the penalty appeal can be adjudicated when the quantum appeal against the additions is still pending before the CIT (Appeals).
Sections Cited
271(1)(c)
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Income Tax Appellate Tribunal, DIVISION BENCHES, JAIPUR
Before: SHRI RAJPAL YADAV & SHRI MANOJ KUMAR AGGARWAL
O R D E R PER RAJ PAL YADAV, VP The present appeal is directed at the instance of the assessees against the order of ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 18.07.2025 passed for assessment year 2008-09. 2. Though the assessee has taken 11 grounds of appeal, but his grievance is that ld.CIT (Appeals) has erred in confirming the penalty of Rs.7,23,293/- imposed by the AO u/s 271(1)(c) of the Income Tax Act.
The ld. counsel for the assessee, at the very outset submitted that the appeal against additions travelled upto the ITAT and ITAT has set aside this appeal bearing No. 24/JPR/2017 to the file of CIT (Appeals) for re-adjudication. Since the quantum appeal is still pending before ld.CIT (Appeals), therefore, penalty appeal cannot be adjudicated.
ITA-1271/JPR/2025 and S.A. 37/JPR/2025 3
The ld. Sr.DR, on the other hand submitted that if this penalty proceeding is being relegated to the CIT (Appeals), then it will unnecessarily enhance the multiplicity of litigation. Therefore, instead of remitting it back to the file of ld.CIT (Appeals), it be kept pending in the Tribunal.
We have duly considered the rival contentions and gone through the record carefully. Sub-clause (iii) of Section 271(1)(c) of the Act provides a mechanism to calculate the penalty on the additions made to the income of the assessee by the AO in the assessment proceedings. In other words, penalty can be equal to the taxes sought to be evaded by the assessee on the additions made to its income or to the extent of three times of such taxes. In the present case, it is yet to determine whether any addition is being made to the income of the assessee or not. Penalty can only be calculated if quantum issues are being determined by the ld.CIT (Appeals). Therefore, at this stage, this appeal would unnecessarily be lying in the Tribunal enhancing the pendency. It can only be re-adjudicated if the quantum appeal is being decided.
ITA-1271/JPR/2025 and S.A. 37/JPR/2025 4 Accordingly, we do not find any merit in the contentions of ld. DR and set aside the impugned order of the ld.CIT (Appeals) and relegate this issue to the file of CIT (Appeals) for fresh adjudication. The penalty appeal is to be decided after the adjudication of quantum appeal. We will appreciate if the Faceless Authorities, allocating the files to the concerned Commissioner of Income Tax (Appeals) would allocate this file to the same CIT (Appeals) who is going to decide quantum appeal or has decided the quantum appeal.
With the above observations, the appeal of the assessee is allowed for statistical purposes.
In view of the above, the Stay Application becomes redundant, hence dismissed.