DCIT Vs Ravindar Shankar Sawant (ITAT Mumbai)
Mumbai ITAT upheld deletion of penalty u/s 271(1)(c), holding that once the underlying quantum additions are deleted, penalty automatically fails.
The Tribunal noted:
- Penalty of ₹61.06 lakh was levied based on additions u/s 68 and 69C
- The ITAT had already deleted the quantum additions in earlier proceedings
- Revenue also conceded this factual position
The ITAT held:
- Penalty is dependent on quantum addition
- Once the foundation (addition) is removed, penalty cannot stand
- Penalty becomes infructuous and non-est
Accordingly:
- Deletion of penalty by CIT(A) was upheld
- Revenue’s appeal was dismissed
The ruling reinforces the settled principle that penalty proceedings cannot survive independently when the underlying addition itself is knocked down.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal is filed by the Revenue against the order dated 24.10.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”].
2. The assessee is an individual. The return of income for A.Y. 2016–17 was filed on 31.03.2017 declaring total income of Rs. 2,95,35,030/-. The case was selected for scrutiny and assessment was completed under section 143(3) of the Income Tax Act, 1961 determining total income at Rs. 4,71,79,030/- after making additions of Rs. 1,59,50,000/- under section 68 and Rs. 16,94,000/- under section 69C of the Act. Subsequently, penalty proceedings were initiated and penalty order under section 271(1)(c) of the Act was passed on 06.03.2025 levying penalty of Rs. 61,06,236/-.
