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Facts
The appeals were preferred by the Assessee against the orders of the Commissioner of Income-tax (Appeals) which upheld penalty orders passed under Section 271B and 270A of the Income Tax Act, 1961. The original assessment proceedings were ex parte.
Held
The Tribunal held that since the quantum assessment orders were set aside by the First Appellate Authority, the substratum of the penalty orders, which arose from those assessment orders, was demolished and thus the penalty orders were liable to be quashed. The appeals were allowed.
Key Issues
Whether penalty orders can survive if the underlying assessment orders are set aside. Legality of proceedings against a non-existing entity.
Sections Cited
271B, 270A
AI-generated summary — verify with the full judgment below
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.