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Facts
The Assessee preferred appeals against the orders of the Commissioner of Income-tax (Appeals) pertaining to penalty orders passed under Sections 271B and 270A of the Income Tax Act, 1961. The quantum assessment proceedings had been set aside by the Ld. FAA.
Held
The Tribunal held that since the quantum addition was set aside to the AO for a fresh order, the present penalty proceedings, which arose out of assessment orders that no longer exist, were demolished and liable to be quashed.
Key Issues
Whether penalty orders are sustainable when the underlying assessment orders have been set aside.
Sections Cited
271B, 270A, 1961
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Income Tax Appellate Tribunal, DELHI BENCHES : B : NEW DELHI
Before: SHRI S. RIFAUR RAHMAN & SHRI ANUBHAV SHARMA
ITAs No.2817 & 2818/Del/2025 of the appeals before it against the orders dated 29.09.2022 passed u/s 271B and 270A of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’), respectively, by the IT Deptt., Circle-22(2), Delhi (hereinafter referred to as the Ld. AO).
On hearing both the sides, we find that amongst other grounds on the legality of the proceedings being conducted in case of a non-existing entity, it was submitted before us that the quantum proceedings have been set aside to the AO on the basis that assessee was also ex parte in the assessment proceedings.
In the light of the aforesaid facts and circumstances, as the quantum addition has been set aside to ld. AO for a fresh order, the present proceedings have arisen only out of assessment orders which no more exist, the substratum of the penalty orders gets demolished and thus are liable to be quashed. The appeals are accordingly allowed. However, this will not be embargo on fresh penalty proceedings, if initiated in consequence to the fresh assessment orders.
Order pronounced in the open court on 26.11.2025.