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Facts
The assessee appealed against the order of the CIT(A) concerning Assessment Year 2018-19. The appeal involved grounds related to condoning delay in filing the appeal and the validity of a penalty order passed by the AO under Section 270A, as well as the quantum of addition.
Held
The Tribunal noted that the addition on which the penalty was imposed had already been deleted in earlier quantum proceedings. Following the principle that a penalty order cannot survive if the underlying addition is deleted, the Tribunal quashed the penalty order.
Key Issues
Whether the penalty order under Section 270A can survive when the quantum addition on which it was based has been deleted by the Tribunal.
Sections Cited
250(6), 270A, 14A
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Income Tax Appellate Tribunal, DELHI BENCH ‘F’: NEW DELHI
(ASSESSMENT YEAR: 2018-19) Extensive Trading (P.) Limited Income Tax Officer, C/o RK Chowdhury, Ward-9(1), Near SR Projeet Colony, Vs. Delhi. Tumangdugri Moubhandar, West Singhbhum-832103 Jharkhand. PAN-AABCF6150C (Appellant) (Respondent) Assessee by Shri Avijit Dey, Adv. Department by Ms. Harpreet Kaur Hansra, Sr. DR Date of Hearing 11/11/2025 Date of Pronouncement 01/12/2025 O R D E R
PER SUDHIR PAREEK, JM:
This appeal is preferred by the Assessee against the order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [‘Ld. CIT(A) in short] dated 19.07.2024 passed U/s 250(6) of the Income Tax Act, 1961 (hereinafter called ‘the Act’) for Assessment Year 2018-19.
The assessee has raised the following grounds of appeal :- “1. Ground 1. For that on the facts and in the circumstances of the case the Learned CIT(A) erred in not condoning delay in filing appeal before him through there is a reasonable cause for the delay.
2. Ground 2. For that on the facts and circumstances of the case, the Ld. CIT(A) ought to have considered that the penalty order u/s 270A passed by the Ld. A.O. is bad in law and is liable to be quashed.
Extensive Trading Pvt. Ltd. vs. ITO 3. Ground 3. For that on the facts and circumstances of the case, the Ld. CIT(A) was not justified in confirming the amount of penalty imposed by the Ld. AO amounting to Rs.19,51,100/- u/s 270A of the Act.
Ground 4. For that the penalty imposed by the A.O. to the tune of Rs.19,51,100/- is not sustainable since the quantum addition on which basis such penalty was imposed has been deleted by the Hon’ble Tribunal vide an order dated 14.05.2025.
Ground 5. The appellant craves leave to add, alter or delete all or any of the grounds of appeal
at the time of hearing.”
3. At the outset, the Learned AR submitted that the Tribunal, while deciding appeal of the assessee ITA 625/Del/2025(AY 2018-19), observed that amendment made by Finance Act, 2022 to section 14A of the Act by inserting a non-obstante clause and explanation will take effect from 01/04/2022 and cannot be presumed to have retrospective effect and no disallowance could be made u/s 14A of the Act if no exempt income was earned by the appellant and accordingly appeal was allowed. It is also submitted that the impugned penalty order is quite erroneous because the addition made by the Learned AO deleted as mentioned hereinbefore by the Tribunal vide order Dated 14/05/2025.
4. Heard rival submissions and carefully perused the material available on record. We find that in quantum proceedings the Tribunal allowed the appeal of the appellant and it is established principal of law that where quantum allowed, then penalty order could not survive and accordingly, same is deserves to be quashed and ground raised by the assessee is hereby allowed.