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Facts
The assessee, a non-filer, made cash deposits of Rs. 16,67,000. The AO reopened the assessment, taxed the deposits as unexplained investment, and levied a penalty of Rs. 3,42,000 under Section 271(1)(c). The CIT(A) upheld the penalty.
Held
The Tribunal noted that the reopened assessment order, which formed the basis for the quantum addition and subsequent penalty, had been quashed by the Tribunal in a separate appeal. Therefore, with the quantum addition not surviving, the penalty under Section 271(1)(c) was deleted.
Key Issues
The key legal issue was whether the penalty levied under Section 271(1)(c) could survive when the underlying quantum addition, on which the penalty was based, had been quashed by the Tribunal.
Sections Cited
Section 148, Section 250, Section 271(1)(c)
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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY, JM & SHRI AVDHESH KUMAR MISHRA, AM
Seva Ram Sahu, Ward No. 24, Vs The Income Tax Officer, Ward-1(5), Janjgiri, Bhilay Marsiling Yard, Office of the Income Tax Officer, Charoda, Durg-490042, Chhattisgarh 18/32 Bungalow, Sector-6, Bhilai, Chhattisgarh PAN: BOQPR9400C (अपीलाथ"/Appellant) (""थ" / Respondent) : िनधा"रती की ओर से / Assessee by : Shri Rajat Kumar, CA राज" की ओर से / Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई की तारीख / Date of Hearing : 09/02/2026 घोषणा की तारीख / Date of : 11/02/2026 Pronouncement आदेश / O R D E R Per Avdhesh Kumar Mishra, AM:
This appeal for Assessment Year (‘AY’) 2014-15 filed by the assessee is directed against the order dated 03.10.2025 of Commissioner of Income Tax (Appeals) [‘CIT(A)’], National Faceless Appeal Centre (NFAC), Delhi passed under section 250 of the Income Tax Act, 1961 (‘Act’).
The sole issue challenges the levy of penalty u/s 271(1)(c) of the Act.
1 Seva Ram Sahu vs. ITO, Ward-1(5) Raipur
The relevant facts giving rise to this appeal are that the assessee, a non-filer of the Income Tax Return (‘ITR’), has made cash deposits aggregating to Rs.16,67,000/- in his bank account during the relevant year. The Ld. Assessing Officer (‘AO’) re-opened the case of the assessee under section 148 of the Act and completed the reopened assessment at income of Rs,16,72,250/- by taxing the cash deposits of Rs.16,67,000/- as un-explained investment. Later, the penalty of Rs.3,42,000/- of the Act was levied under section 271(1)(c) of the Act. Aggrieved with the assessment order and penalty order, the assessee filed appeals before the Ld. CIT(A), who dismissed both appeals. The penalty was sustained on the reasoning that the quantum addition had been confirmed by him. Here, we are tasked to decide the impugned order upholding the penalty levied under section 271(1)(c) of the Act.
At the outset, Shri Rajat Kumar, CA, Ld. Authorized Representative (‘AR’) of the assessee drew our attention to the fact that the reopened assessment order was quashed by the Tribunal in assessee’s case in ITA No.294/RPR/2024. Hence, the quantum addition on which the penalty levied did not survive; therefore, the penalty had no locus standi after the Tribunal’s order in assessee’s case in ITA No.294/RPR/2024. A copy of the said order of the Tribunal was placed on the record. He thus, prayed for deletion of the penalty. To which, Dr. Priyanka Patel, Ld. Sr. DR appeared in agreement.
We have heard both parties and have perused the material available on the record. We find merit in the submission of the Ld. AR. Since the quantum on which 2 Seva Ram Sahu vs. ITO, Ward-1(5) Raipur the penalty levied under section 271(1)(c) of the Act does not survive anymore; therefore, we have no option except to delete the penalty of Rs.3,42,000/-. The assessee gets consequential relief.
In the result, this appeal of assessee is allowed.
Order pronounced in the open court on 11/02/2026. (PARTHA SARATHI CHAUDHURY) (AVDHESH KUMAR MISHRA) "ाियक सद" / JUDICIAL MEMBER लेखा सद" / ACCOUNTANT MEMBER