SWAPNA KATAKAM,HYDERABAD vs. INCOME TAX OFFICER, WARD-4(3), HYDERABAD
What did the Tribunal hold?
The Tribunal held that since the additions on which the penalty was levied were no longer in existence due to the earlier ITAT order setting aside the assessment, the penalty order could not survive. The penalty issue was restored to the Assessing Officer for reconsideration.
What were the facts?
The assessee's income was assessed at a higher amount than declared, with additions for cash deposits and estimated business income. The ITAT previously set aside the assessment order to the Assessing Officer for fresh adjudication. Subsequently, a penalty was levied, which the CIT(A) upheld.
What were the issues?
Whether a penalty can be sustained when the underlying additions forming the basis of the penalty have been set aside for fresh adjudication. The validity of penalty proceedings in light of a prior ITAT order.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, HYDERABAD BENCHES “SMC”, HYDERABAD
Before: SHRI MANJUNATHA. G. Hon’ble
O R D E R PER MANJUNATHA G. A.M: This appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi passed on 12.02.2024 for the assessment year 2017-18.
2 ITA 333/Hyd/2024
The brief facts of the case are that the assessee is an individual filed her return of income for the assessment year 2017-18 on 31.12.2017 declaring total income of Rs.4,98,322/-. The assessment has been completed u/s 144 of the Income Tax Act on 19.12.2019 and determined total income at Rs.39,84,623/- by making additions towards cash deposits into bank account of Rs.25,26,050/- u/s 69A r.w.s. 115BBE of the Income Tax Act, 1961. The Assessing Officer had also estimated business income on gross turnover declared by the assessee @ 8% and made addition of Rs.7,98,427/-. The assessee challenged the assessment order passed by the Assessing Officer before the first appellate authority, but could not succeed. The assessee carried the matter in further appeal before the Tribunal. The ITAT Hyderabad Benches in of 2023 order dt.03.08.2023 set aside the order passed by the ld.CIT(A) and restored the issue to the file of Assessing Officer for fresh adjudication. In the mean time, the Assessing Officer initiated penalty proceedings u/s 271AAC(1) of the Income Tax Act, 1961, and after considering the submissions of the assessee, passed order imposing penalty of Rs.1,95,136/- u/s 271AAC of the Income Tax Act, 1961. On appeal, the ld.CIT(A) vide order dt.12.02.2024 sustained the penalty levied by the Assessing Officer and dismissed the appeal filed by the assessee.
3 ITA 333/Hyd/2024
Aggrieved with the order, the assessee is in appeal before me.
The learned counsel for the assessee, Ms. Chinmai, submitted that the quantum appeal filed by the assessee on additions made by the Assessing Officer towards cash deposits and estimation of business income has been set aside by the ITAT to the file of Assessing Officer and thus, penalty levied on said additions, which are no longer in existence, cannot survive under the law. 5. The ld. DR, Ms. Vishnu Priya, on the other hand, fairly admitted that since the quantum appeal filed by the assessee has been set aside to the file of Assessing Officer, and the penalty order passed by the Assessing Officer may be restored back to the file of Assessing Officer to reconsider the issue of penalty proceedings after completion of assessment proceedings.
I have heard both the parties, perused the materials on record and gone through the orders of the authorities below. The Assessing Officer levied penalty u/s 271AAC of the Income Tax Act, 1961 on additions made towards cash deposits in the bank account u/s 69A r.w.s 115BBE of the Act and estimated addition of net profit on gross turnover. The assessee has challenged additions made by the Assessing Officer towards cash deposit and estimated the net profit on gross turnover before the Tribunal, and 4 ITA 333/Hyd/2024 the Tribunal in order dt.03.08.2023 has set aside the order passed by the ld.CIT(A) and restore both the issues to the file of Assessing Officer with a direction to reconsider the issue. Since, the additions on which the penalty levied by the Assessing Officer are no longer in existence, in my considered opinion, the order passed by the Assessing Officer imposing penalty u/s 271AAC of the Income Tax Act, 1961 cannot survive. Thus, I set aside the order passed by the ld.CIT(A) and restore the issue of penalty to the file of Assessing Officer and direct the Assessing Officer to reconsider the penalty proceedings after completing the assessment proceedings in pursuant to the directions given by the ITAT in ITA No.361/Hyd/2023.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 25th April, 2024.
More judgments on Section 69A
- Vishal Kumar Patel(HUF), Raipur vs DCIT, Circle-1(1), RaipurITA 595/RPR/2026[2017-18]Status: Heard21 Oct 2026AY 2017-18
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- Hemal Paresh Madeka, Rajkot vs Asst.Commissioner of Income Tax…ITA 955/RJT/2026[2020-21]Status: Disposed19 Oct 2026AY 2020-21
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