Dineshbhai Mohanbhai Dangariya Vs ITO (ITAT Rajkot)
This appeal concerned penalty of Rs.79,287/- imposed by AO u/s 271B for failure to get books audited, as Assessee’s turnover exceeded Rs.40 lakhs. AO issued penalty notice on 25.03.2016 & levied penalty @1% of turnover, observing that Assessee neither got books audited nor responded to notices. CIT(A) confirmed the penalty, noting absence of any effective rebuttal during appellate proceedings.
Before Tribunal, Learned Counsel submitted that the very quantum addition forming the basis of penalty had already been deleted by Tribunal in Assessee’s own case in ITA No.236/RJT/2024 vide order dated 17.03.2025. Therefore, once the underlying turnover-based addition no longer survived, the penalty u/s 271B automatically failed. Revenue supported the penalty order.
Tribunal noted that AO initiated & imposed penalty based solely on the quantum assessment which had now been deleted in entirety. Once the foundation (quantum addition) was removed, the superstructure (penalty) could not stand. Tribunal invoked the legal maxim “sublato fundamento cadit opus”, holding that illegality at the base strikes down all subsequent proceedings. As there remained no valid basis to sustain the penalty, the same was deleted. Appeal was accordingly allowed in full.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
