TaxTMI 
TaxTMI 
2026 (10) TMI 666
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....20, whereby the ld.CIT(A) dismissed the appeal of the assessee against the penalty imposed by the Assessing Unit, Income Tax Department, under section (u/s.) 270A, 271AAC(1) and 272A of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). 2. Brief facts of the case emanating from the records are that the assessee is an individual and did not file his return of income for AY 2019-20. As per the information available with the department, the AO observed that the assessee had purchased an immovable property on 09.08.2018 amounting to Rs. 4,25,000/-, whereas the market value was Rs. 12,85,328/- by paying the stamp duty of Rs. 90,000/- and had earned interest income of Rs. 26,550/-. Accordingly, the AO initiated reassessment proce....
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....g the separate appeals. Assessee had assumed that the quantum appeal is challenged by filing the appeal was enough for the penalties levied also. Further, the assessee stated that she had submitted all the details before the ld.CIT(A) and inturn the ld.CIT(A) has remitted the case to the files of the AO as per section 251(1)(a) of the Act with a direction to frame the assessment denovo by passing an order dated 28.11.2025. Accordingly, the AO has completed the assessment and passed an order giving effect dated 18.12.2025 by deleting the entire additions made and arrived revised total income at Rs. 26,550/- with Nil taxes. Hence, the assessee prayed for deleting the consequential penalties levied by the AO. 6. Per contra, the ld.DR suppor....
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....short issue arising for our consideration is whether the penalties levied u/s. 270A, 271AAC(1) and 272A(1)(d) of the Act can survive when the very additions/income in respect of which the penalties u/s. 270A and 271AAC(1) were levied have subsequently been deleted in the quantum proceedings and, as per the order giving effect dated 18.12.2025, there is no taxable income and no tax payable by the assessee. We find substantial force in the contention of the assessee. Penalty proceedings u/s. 270A and 271AAC(1) are consequential to the determination of the relevant income and tax liability. In the present case, the foundation on which the impugned penalties were levied, namely, the additions of Rs. 14,01,878/- made in the original assessment, ....
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....proceedings is a material fact which directly goes to the root of the levy of penalty. Since the additions themselves have been deleted and the resultant tax liability has been determined at Nil by the AO in the order giving effect dated 18.12.2025, it would serve no useful purpose to sustain the penalties u/s. 270A and 271AAC(1) merely on a technical ground without considering the changed factual position. 12. As regards the penalty levied u/s. 272A(1)(d) of the Act, the same stands on a different footing since the said provision relates to failure to comply with a notice or direction referred to in the relevant provisions of the Act. Nevertheless, in the present case, the assessee has specifically submitted that the quantum proceedings....