MR. RAVINDER KUMAR JAIN,DELHI vs. DCIT,CENTRAL CIRCLE-07, DELHI

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ITA 1579/DEL/2025Status: DisposedITAT Delhi12 November 2025AY 2006-07Bench: SHRI CHALLA NAGENDRA PRASAD (Judicial Member), SHRI M BALAGANESH (Accountant Member)7 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that initiating penalty proceedings on income already offered by the assessee and included in the return is not permissible, especially when no penalty was initiated during the original assessment. The Tribunal also noted that the AO exceeded jurisdiction in the set-aside proceedings by re-examining issues not before the ITAT. The initiation of penalty on an addition without proper justification was also questioned.

What were the facts?

The assessee filed an appeal against the order of the CIT(Appeals) sustaining a penalty levied under section 271(1)(c). The penalty was based on additional income offered by the assessee and undisclosed investments. The original assessment order did not initiate penalty proceedings for the admitted income.

What were the issues?

Whether penalty proceedings initiated in set-aside assessment are valid for income already offered by the assessee and not penalized earlier? Whether AO exceeded jurisdiction in set-aside proceedings?

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 254,Section 144

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(8)Show list

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Income Tax Appellate Tribunal, DELHI BENCH “G” NEW DELHI

Before: SHRI CHALLA NAGENDRA PRASAD & SHRI M BALAGANESH

For Appellant: Shri M.P. Rastogi, Advocate, Shri P.N. Shastri, Advocate &, Shri Shivam Malik, Advocate, Shri Manish Gupta, Sr. DR
Hearing: 26.08.2025

Assessee by Shri M.P. Rastogi, Advocate, Shri P.N. Shastri, Advocate & Shri Shivam Malik, Advocate Shri Manish Gupta, Sr. DR Revenue by सुनवाईक�तारीख/ Date of hearing: 26.08.2025 12.11.2025 उ�ोषणाक�तारीख/Pronouncement on आदेश /O R D E R PER C.N. PRASAD, J.M.

This appeal is filed by the Assessee against the order of the Ld. CIT(Appeals)-24, New Delhi dated 07.02.2025 for the AY 2006-07 in sustaining the penalty levied u/s 271(1)(c) of the Act. following additions are the subject matter of the penalty proceedings u/s 271(1)(c) of the Act: a) Additional income of Rs.58,85,666/- offered for taxation; b) Income of Rs.1,25,000/- as undisclosed investment; c) Income of Rs.1 lakh as undisclosed investment.

3.

Ld. Counsel submitted that Rs.58,85,666/- was the income offered for assessment and included in the original return of income filed. The Assessing Officer, who made the original assessment order, has not initiated the penalty proceedings (copy of original assessment order at page 3 of paper book). In the original assessment order, the AO had made various other additions, against which the assessee had filed appeal before the CIT(Appeals). The CIT(Appeals) vide order dated 15.06.2012 had given partial relief to the assessee.

4.

Against the order of the CIT(Appeals), the assessee as well as the department preferred appeals before the ITAT and the ITAT vide order dated 09.10.2019 had set aside the issue raised in the cross appeals on the file of the Assessing Officer (copy of ITAT order at page 47 of the paper book).

AO on 2/3.09.2021 (copy at page 47 of the paper book). In the fresh assessment, the AO initiated penalty proceedings u/s 271(1)(c) of the Act in respect of Rs.58,85,666/- which was offered by the assessee and included in his income while filing his return and in respect thereof, the then AO did not initiate any penalty proceedings in relation to this amount. By the initiation of penalty proceedings in fresh assessment order u/s 143(3)/254, the AO exceeded his jurisdiction under the law, in set-aside proceedings, the AO has the jurisdiction only in respect of those issues which were before the ITAT and he cannot reexamine/examine the issues which were not before the ITAT.

- 145 ITR 255 (All), S.P. Kochhar vs. ITO - 40 ITR 618 (SC), Bhopal Sugar Industries Ltd. vs. ITO - M/s Ambattur Flats vs. ITO dated 22nd May, 2012.

6.

Ld. Counsel submitted that even otherwise, the initiation of penalty proceedings in fresh assessment proceedings in respect of amount of Rs.58,85,666/- amounts to review/revisit of own order dated 28.12.2007 which is impermissible under the law. Under the law, the AO has no power to review/revisit his own order in fresh assessment proceedings.

Ld. Counsel submitted that after completion of original assessment, the then AO had levied the penalty under section 271(1)(c) vide order dated 03.03.2014 and in that very penalty order, even the then AO had not levied penalty in relation to amount of Rs.58,85,666/- which itself shows that the amount of Rs.58,85,666/- was not the income concealed in the eyes of the law. It is submitted that the AO has not specifically pointed out the specific limb in which the penalty is likely to be imposed.

- 432 ITR 84 (Del), PCIT vs. Sahara India Life Insurance Co. Ltd. - 434 ITR 1 (Bom.) (FB), Mohd. Farhan A. Shaikh vs. DCIT - 462 ITR 307 (Del), PCIT vs. Unitech Reliable Projects Pvt. Ltd. (SLP dismissed in 300 Taxman 585 (SC)).

7.

Ld. Counsel submitted that as far as the other two items amounting to Rs.1,25,000/- and Rs.1,00,000/- are concerned, the Assessing Officer in fresh assessment proceedings had not initiated any penalty proceedings. So much so, in fresh assessment order, though aforesaid amount has been included in final assessment order dated 03.09.2021, but no discussion in relation thereto has been proceedings.

8.

On the other hand, the Ld. DR supported the orders of the authorities below.

9.

Heard rival contentions, perused the orders of the authorities below. On perusal of the assessment order dated 28.12.2007 passed u/s 144 of the Act suggest that the Assessing Officer though initiated penalty proceedings on various additions made in the assessment order, no penalty proceedings were initiated on the additional income of Rs.58,85,666/- admitted by the assessee as per the note attached to the return of income. It is observed that the assessee contested various additions made in the assessment order before the Ld. CIT(A) and the Ld. CIT(A) partly allowed the appeal of the assessee by deleting such additions. Against the order of the Ld. CIT(Appeals) both Assessee as well as Revenue preferred appeal before the Tribunal and the Tribunal by order dated 09.10.2019 set aside all the issues in both Revenue’s appeal as well as Assessee’s appeal to the file of the Assessing Officer for deciding the issues afresh in view of the additional evidences furnished by the assessee before the Ld. CIT(Appeals). The set aside assessment was completed on 02.09.2021 u/s 143(3) r.w.s. 254 of the Act considering 5 return as income of the assessee, also considered Rs.2,25,000/- as income of the assessee by ultimately assessing the total income at Rs.70,60,813/- including the returned total income of Rs.9,50,151/-.

We observed that penalty proceedings were initiated in the set aside assessment proceedings on the additional income which was already offered in the return of income by the assessee. While completing the original assessment proceedings the AO never initiated any penalty proceedings on the additional income offered by the assessee in its return of income. Only during the set aside assessment proceedings the Assessing Officer seems to have initiated the penalty proceedings on the additional income offered by the assessee which is not permissible in law. Similarly even though the Assessing Officer considered an amount of Rs.2,25,000/- as part of assessed income while completing the set aside assessment. The Assessing Officer never discussed on this addition as to why this addition is made.

Therefore, we see no justification in initiating the penalty proceedings on an income which was considered as part of addition without making any kind of observations and how this income represents concealment or furnishing of inaccurate particulars of income. Therefore, we find considerable merit in the submissions of of the Ld. CIT(A) and direct the AO to delete the penalty levied u/s 271(1)(c) of the Act.

10.

In the result, appeal of the Assessee is allowed.

Order pronounced in the open court on 12.11.2025

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