Facts of the Case

The assessee, Anurag Jaiswal, filed an appeal before the Income Tax Appellate Tribunal, Allahabad Bench, against the order passed by the Commissioner of Income Tax (Appeals), which confirmed a penalty of ₹1,18,203 levied under Section 270A of the Income-tax Act for Assessment Year 2020-21.
The penalty originated from an assessment order passed under Section 147 read with Section 144B. Subsequently, the quantum additions forming the basis of the penalty were set aside by the ITAT and remanded to the Assessing Officer for fresh adjudication. Despite this, the CIT(A) confirmed the penalty solely on the ground that the quantum appeal had been decided against the assessee.

 

Issues Involved

  1. Whether a penalty under Section 270A can be confirmed when the original quantum assessment has been set aside and restored for fresh consideration.
  2. Whether the confirmation of penalty without considering the status of the remanded quantum proceedings is legally sustainable.

 

Petitioner’s Arguments

The assessee contended that the order passed by the CIT(A) was defective and unsustainable in law, as the penalty was confirmed despite the fact that the original assessment order had already been set aside by the ITAT.
It was argued that once the quantum assessment no longer survives in its original form, the penalty proceedings, being consequential in nature, cannot independently stand. The assessee also raised concerns regarding violation of principles of natural justice.

 

Respondent’s Arguments

The Revenue relied on the reasoning adopted by the CIT(A), asserting that since the quantum appeal had been decided against the assessee at the appellate stage, the penalty levied under Section 270A was justified and rightly confirmed.

 

Court Order 

The ITAT observed that the CIT(A) confirmed the penalty on an erroneous premise that the quantum additions had attained finality. The Tribunal noted that the quantum assessment had already been set aside by the ITAT and restored to the Assessing Officer for fresh consideration.
Accordingly, the Tribunal held that the impugned order of the CIT(A) could not be sustained. The penalty matter was restored to the file of the Assessing Officer with a direction to pass a de novo order in accordance with law, after granting reasonable opportunity to the assessee and after considering the outcome of the consequential assessment proceedings.

 

Important Clarification

The Tribunal categorically reaffirmed that penalty proceedings are consequential and dependent on the final determination of quantum additions. Where the quantum assessment itself is unsettled or remanded for fresh adjudication, the penalty cannot be mechanically confirmed and must be revisited in light of the final assessment outcome.

Link to download the order -  https://www.mytaxexpert.co.in/uploads/1770875395_ANURAGJAISWALLUCKNOWVS.ITO21ALLAHABADALLAHABAD.pdf  

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