SHRI PURAN CHAN & CO.,DEHRADUN vs. DCIT, CC-DEHRADUN, DEHRADUN
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Income Tax Appellate Tribunal, DELHI
Before: SHRI S. RIFAUR RAHMAN & SHRI YOGESH KUMAR U.S.
PER YOGESH KUMAR, U.S. JM:
The present appeal is filed by the Assessee against the order of the
Commissioner of Income Tax (Appeals)-3, Noida [‘Ld. CIT(A)’ for short]
dated 11/06/2025 pertaining to Assessment Year 2016-17.
Brief facts of the case are that, the order of penalty has been
passed u/s 271(1)(C) of the Income Tax Act, 1961 ('Act' for short) in
consequent to the assessment order passed u/s 143(3) of the Act on
28/12/2018. Aggrieved by the assessment order, the Assessee preferred
an Appeal before the Ld. CIT(A) and the Ld. CIT(A) vide order dated
17/01/2024, deleted certain additions and also sustained certain
2 ITA No. 111/DDN/2025 Shri Puran Chan & Co. Vs. DCIT
addition. Thereafter, notice u/s 271(1)(c) of the Act were issued on
28/12/2018 and on 02/02/2018. An order of penalty came to be passed
on 28/03/2025 by imposing penalty of Rs. 1,18,808/. As against the
order of penalty dated 28/03/2025, the Assessee preferred an appeal
before the Ld. CIT(A). The Ld. CIT(A) vide order dated 11/06/2025,
dismissed the Appeal filed by the Assessee. Aggrieved by the order of Ld.
CIT(A) dated 11/06/2025, the Assessee preferred the present Appeal on
the grounds mentioned above.
3.The Ld. Counsel for the Assessee arguing on Ground No. 1, submitted
that the A.O. has not specified the limb of provision of Section 271(1)(C)
of the Act in the penalty notice dated 28/12/2018, therefore, the
initiation of penalty is erroneous.
Per contra, the Ld. Departmental Representative submitted that
the subject penalty proceedings have been initiated pursuant to the
penalty notice dated 02/12/2024, wherein specific limb of penalty has
been mentioned. The Ld. Department's Representative taken us through
the notice of penalty dated 02/12/2024 reproduced at Page No. 9 of the
order of the Ld. CIT(A) and submitted that the present penalty
proceedings has been initiated and penalty order passed after passing of
the order by the Ld. CIT(A) in Quantum Appeal, wherein substantial
3 ITA No. 111/DDN/2025 Shri Puran Chan & Co. Vs. DCIT
additions have been deleted and the present penalty proceedings
initiated pursuant to the notice dated 02/12/2024, wherein specific limb
has been mentioned. Further submitted that no order of penalty has
been issued pursuant to the penalty notice dated 28/12/2018 which was
relied by the Assessee and the said notice dated 28/12/2018 was issued
prior to passing of the order in quantum Appeal by the Ld. CIT(A). Thus
sought for dismissal of Ground No.1 of the Assessee.
We have heard both the parties and perused the material available
on record. It is the specific case of the Assessee, that no limb has been
mentioned in the penalty notice dated 28/12/2018, therefore, the
impugned penalty order does not survive in the eye of law. However, the
impugned penalty proceedings have been initiated after the order of the
Ld. CIT(A) in quantum Appeal,the Ld. CIT(A) in quantum appeal granted
substantial relief to the Assessee, thereafter penalty notice u/s 274 r.w.
Section 271(1)(c) of the Act was issued on 02/12/2024, wherein specific
limb of ‘concealed the particulars of income’ has been mentioned and the
impugned order of penalty has been passed thereupon. No such order of
penalty has been passed pursuant to the notice dated 28/12/2018 relied
by the Ld. Assessee's Representative. Therefore, the argument of the Ld.
Assessee's Representative is not only mis-conceived but also misleading
4 ITA No. 111/DDN/2025 Shri Puran Chan & Co. Vs. DCIT
one. Accordingly, we find no merits in Ground No. 1 of the Assessee.
Thus, Ground No. 1 of the Assessee is dismissed.
The Ld. Assessee's Representative arguing on Ground No. 2
submitted that penalty has been imposed on estimated income and no
penalty can be imposed on estimated income, thus sought for allowing
Ground No.2.
Per contra, the Ld. Departmental Representative submitted that the
penalty has been imposed both estimated income as well as other
income, therefore, sought for dismissal of the Appeal.
We have heard both the parties and perused the material available
on record. It is well settled law that a penalty cannot be initiated for
estimated income.In the present case, as per the Ld. Department's
Representative the penalty has been also imposed not only on estimated
income but also on other income. However, either the parties have not
produced the details of the penalty imposed to bifurcate the penalty
imposed on estimated income and otherwise. Considering the above
facts and circumstances, we hold that the penalty imposed to the extent
of estimated income cannot sustained, accordingly deleted and
5 ITA No. 111/DDN/2025 Shri Puran Chan & Co. Vs. DCIT
remaining penalty other than the estimated income if any is hereby
sustained.
In the result, Appeal of the Assessee is partly allowed.
Order pronounced in the open court on 14th November, 2025
Sd/- Sd/- (S. RIFAUR RAHMAN) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 14.11.2025 R.N, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI
