Sugrabahen Umer Bhorania Vs ITO (ITAT Mumbai)
Penalty u/s 271(1)(c) Premature When Quantum Appeal Pending: Mumbai ITAT Remands Matter to AO
Tribunal dealt with Assessee’s appeal against penalty of ₹45,10,345/- levied u/s 271(1)(c). Assessment was reopened u/s 147 r.w.s. 144 after Assessee did not file return or respond to notices issued pursuant to 148A(b). AO treated ₹68,16,000/- as Short Term Capital Gain by taking cost of acquisition at NIL & made a further addition of ₹68,00,000/- as income from other sources based on TDS credit mismatch. Assessee had already filed a quantum appeal before CIT(A), which remains pending.
In the meantime, AO levied penalty u/s 271(1)(c). When Assessee appealed, CIT(A) dismissed the penalty appeal as “not maintainable” citing s.249(4), alleging non-payment of advance tax. Tribunal observed that quantum appeal against additions is still pending & therefore the penalty proceedings are premature. Tribunal held that penalty cannot be sustained when quantum itself has not attained finality & issues on which penalty is based are yet to be adjudicated.
Tribunal also noted the peculiarities of the faceless regime where such technical dismissals occur without addressing the core legal position. Tribunal therefore set aside the penalty order & restored the matter to AO, directing that the issue of penalty be re-examined only after CIT(A) disposes of the quantum appeal. Appeal was allowed for statistical purposes.
