Akil Abbas Rassai Vs DCIT (ITAT Mumbai)
Section 270A Penalty Deleted as Underlying Section 56(2)(x) Addition Set Aside for Fresh Adjudication
The assessee was levied penalty of ₹16.05 lakh under section 270A for alleged under-reporting of income arising from an addition of ₹82.35 lakh under section 56(2)(x). However, in separate quantum proceedings, the Tribunal had already set aside this very addition and restored the issue to the Assessing Officer for fresh examination based on evidences.
The Tribunal held that penalty under section 270A is consequential to a final and crystallised finding of under-reported income. Once the quantum addition itself has been vacated and is pending de novo adjudication, there is no subsisting determination of under-reporting or misreporting.
Since the very foundation of the penalty had ceased to exist, allowing the penalty to stand would amount to prejudging the outcome of the fresh assessment. Penalty proceedings cannot independently survive on an uncertain and unsettled quantum issue.
The Tribunal clarified that after the quantum issue is finally decided afresh, the Assessing Officer is free, if permissible in law, to consider penalty again. But at the present stage, the existing penalty order had no legal legs to stand.
Accordingly, the penalty under section 270A was deleted in full and the assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present appeal has been preferred by the assessee against the order dated 16.10.2025 passed by the National Faceless Appeal Centre, Delhi, whereby the penalty of Rs.16,05,922/- levied under section 270A of the Income-tax Act, 1961, for the assessment year 2018-19, has been confirmed.
