RishirajHitendra Bhandari Vs ITO (ITAT Mumbai)
The Mumbai ITAT allowed the assessee’s appeal for AY 2017-18 and deleted the penalty levied under section 271AAC, holding that the penalty was purely consequential to the addition made under section 69 of the Income-tax Act.
In the quantum proceedings, the CIT(A) had entirely deleted the adition under section 69 relating to alleged unexplained investment in an immovable property (which was primarily in the name of the assessee’s father, with the assessee as a joint owner). The Revenue did not challenge this quantum relief.
The Tribunal observed that section 271AAC applies only where income referred to in sections 68, 69, 69A, 69B, 69C or 69D is determined and taxed under section 115BBE. Once the very foundation of such income ceased to exist, the penalty could not be sustained.
Accordingly, the Tribunal held that when the quantum addition under section 69 is deleted, penalty under section 271AAC automatically fails, and directed deletion of the penalty. The assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal filed by the assesseeemanates from the order passed under Section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the learned Commissioner of Income-Tax, National Faceless Appeal Centre*in short, ‘CIT(A), NFAC’+, Delhi, dated 22.09.2025 for the Assessment Year 2017-18, wherein the assessee has challenged the sustenance of levy of penalty u/s. 271AAC of the Act.
