ACIT, AGRA vs. SAURABH GUPTA, AGRA
Facts
The assessee received and repaid cash loans, leading to additions under Section 69A and penalties under Sections 271D and 271E. The CIT(Appeals) deleted the penalties because the underlying quantum additions had already been deleted by the first appellate authority and confirmed by the ITAT.
Held
The Tribunal upheld the CIT(Appeals)'s decision, stating that once the quantum additions forming the basis for penalties are deleted, the penalties cannot survive. The satisfaction recorded in the assessment order for initiating penalty proceedings also ceases to exist when the assessment order is annulled.
Key Issues
The key legal issue was whether penalties under Sections 271D and 271E can be sustained when the quantum additions, which were the basis for these penalties, have been deleted by higher authorities.
Sections Cited
Section 69A, Section 271D, Section 271E, Section 269SS, Section 269T, Section 143(3), Section 153C, Section 132, Section 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AGRA BENCH, AGRA
Before: SHRI S. RIFAUR RAHMAN & SHRI SUNIL KUMAR SINGH
IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No. 165 & 166/Agr/2025 Assessment Year: 2015-16
ACIT, Central Circle, Vs. Saurabh Gupta, A-185/4, Kamla Agra. Nagar, Agra. PAN :AEBPG3309K (Appellant) (Respondent)
Assessee by Sh. Anurag Sinha, Advocate Department by Sh. R.P. Maurya, CIT (A)-1/DR
Date of hearing 18.12.2025 Date of pronouncement 15.01.2026
ORDER PER : SUNIL KUMAR SINGH, JUDICIAL MEMBER:
Both these appeals have been preferred by Revenue against two separate impugned orders each dated 24.01.2025 passed in Appeal No. CIT (A)-IV/KNP/10428 and CIT (A)-IV/KNP/10438 respectively by the Ld.
Commissioner of Income-tax (Appeals)-4, Kanpur u/s. 250(6) of the Income- tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2015-16, wherein the ld. CIT(Appeals) has allowed assessee’s first appeals,
deleting penalties imposed u/s. 271E and 271D of the Act respectively. 2. Briefly stated, the facts are that the assessment in the case of the respondent-assessee was completed under section 143(3) read with section
ITA No.165 & 166/Agr/2025
153C of the Act, pursuant to incriminating material found during search and
seizure proceedings dated 26.09.2017 under section 132 conducted in the
BNR Group cases. During the assessment proceedings, the Assessing
Officer made additions of Rs.1,75,00,000/- on account of cash loans
received and Rs.1,19,60,000/- on account of repayment of such loans in
cash, treating the same as unexplained money under section 69A of the Act.
Consequent thereto, the Assessing Officer initiated penalty proceedings
under sections 271D and 271E of the Act for contravention of sections
269SS and 269T, respectively, and imposed penalties of Rs.1,75,00,000/-
and Rs.1,19,60,000 vide separate orders each dated 29.05.2023, passed
u/s. 271D and 271E of the Act.
Aggrieved, the assessee preferred appeals before the learned
CIT(Appeals), who allowed the appeals and deleted the penalties on the
ground that the underlying quantum additions had already been deleted by
the first appellate authority and, therefore, the penalties could not survive.
The Revenue has filed the present second appeals on the ground that
the quantum additions were deleted on erroneous findings and that penalty
proceedings are independent of the assessment proceedings.
The principal issue for adjudication under appeal is as to whether the
learned CIT(Appeals) erred in deleting the penalties when the quantum
additions had already been deleted ?. 2 | P a g e
ITA No.165 & 166/Agr/2025
It is undisputed fact that the additions made by the Assessing Officer
have been deleted by the first appellate authority, vide order dated
30.11.2023 passed in Appeal No. CIT (A)-IV/KNP/10331/2014-15, which has
been confirmed by ITAT vide order dated 13.02.2025 passed in ITA No. 36 &
37/Agr/2024 for A.Yrs. 2015-16 & 2017-18. The impugned penalties were
levied solely on the basis of those additions and were thus consequential in
nature. Ld. CIT(Appeals) relied K.C. Builders vs. ACIT, 135 Taxman
461(SC), wherein Hon’ble Apex Court held that where the additions in the
assessment order, on the basis of which penalty was levied, are deleted,
there remains no basis at all for levying the penalty. Since the additions
forming the very basis of the penalty proceedings are deleted, the very
foundation of the penalties collapse. The penalties cannot thus be sustained
independently. The law mandates that the Assessing Officer must record
satisfaction regarding the alleged violation of sections 269SS and 269T of
the Act in the assessment order itself for valid initiation of penalty
proceedings under sections 271D and 271E of the Act. When such an
assessment order is annulled or set aside by a higher authority, the
satisfaction recorded therein also ceases to exist, rendering the penalty
proceedings invalid. In view of the above, we find no infirmity in the orders
passed by the learned CIT(Appeals) deleting the impugned penalties.
Accordingly, both the appeals filed by the Revenue are dismissed. 3 | P a g e
ITA No.165 & 166/Agr/2025
In the result, the appeals of the Revenue, ITA No. 165 & 166/Agr/2025
stand dismissed.
Order pronounced in the open court on 15.01.2026.
Sd/- Sd/- (S. RIFAUR RAHMAN) (SUNIL KUMAR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 15.01.2026 *aks/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra
4 | P a g e
