The Income Tax Appellate Tribunal, Delhi Bench ‘A’, adjudicated the appeal filed by the assessee against the order dated 29.03.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, under Section 250 of the Income-tax Act, 1961, confirming the penalty imposed under Section 271(1)(c) of the Act for Assessment Year 2009-10.

The assessee had filed its return of income declaring a loss, which was subsequently revised. The case was subjected to scrutiny and an assessment order was passed under Sections 263, 147 and 143(3) of the Act. Pursuant thereto, the Assessing Officer levied penalty under Section 271(1)(c) vide order dated 14.01.2022.

Aggrieved by the penalty order, the assessee preferred an appeal before the CIT(A), which was dismissed. The assessee contended that there was no concealment of income and that the addition, on the basis of which penalty was levied, had already been deleted by the Income Tax Appellate Tribunal vide its order dated 12.12.2024 in ITA No. 4740/Del/2019.

Before the Tribunal, it was submitted that the assessee had merely received back the loan granted to M/s Shalini Holdings Limited and that the quantum addition itself did not survive. It was further contended that once the addition forming the foundation of the penalty had been deleted, the penalty could not be sustained in law.

The Tribunal observed that the addition made by the Assessing Officer vide assessment order dated 06.12.2017 had already been deleted by the Coordinate Bench of the Tribunal. Consequently, the penalty order passed under Section 271(1)(c) and the appellate order confirming the same were rendered unsustainable. Accordingly, the Tribunal set aside the penalty order as well as the order of the CIT(A) and allowed the appeal of the assessee.

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