SPR Publications Private Limited Vs ITO (ITAT Hyderabad)
The assessee appealed against the order dated 22.08.2025 of the CIT(A), NFAC, confirming a penalty of Rs.5,22,000 under Section 271(1)(c) of the Income-tax Act for Assessment Year 2011-12.
Before the Tribunal, the assessee submitted that the CIT(A) had confirmed the penalty despite being informed that the quantum appeal against the assessment order was still pending adjudication before another CIT(A). The assessee produced a copy of Form 35 and a screenshot from the department’s e-proceeding portal showing the quantum appeal as pending and requested that the penalty matter be decided only after the outcome of the quantum appeal.
The Revenue relied on the order of the CIT(A). The CIT(A) had observed that there was no pending quantum appeal before him and that, even if such an appeal was pending before another CIT(A), its outcome would not affect the penalty appeal in view of Section 275(1A), as the Assessing Officer could modify the penalty if relief was granted in the quantum proceedings.
The Tribunal held that penalty under Section 271(1)(c) is leviable only in relation to additions made in the assessment proceedings and that the outcome of the quantum appeal has a direct bearing on the levy of penalty. Since the pendency of the quantum appeal had been brought to the notice of the CIT(A), the penalty appeal ought to have been decided only after the quantum appeal was adjudicated. Finding the order of the CIT(A) unjustified, the Tribunal set it aside and remanded the matter to the CIT(A) for fresh adjudication after the outcome of the pending quantum appeal, with a direction to provide the assessee an opportunity of hearing. The appeal was allowed for statistical purposes.
