Case Law Details
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.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal by the Assessee is directed against the Order dated 22.08.2025 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC”], Delhi, arising from the penalty order passed u/sec.271(1)(c) of the Income Tax Act [in short “the Act”], 1961 for the assessment year 2011-2012.
2. The assessee has raised the following grounds of appeal:
1. The order passed by the Ld. CIT (A) under section 250 dated 22-08-2025 is erroneous both on facts and in law to the extent the order is prejudice to the interests of the appellant.
2. The Ld. CIT (A) erred in upholding the penalty order passed by the AO, without affording reasonable opportunity of being heard to the appellant, which is against the principles of Natural Justice.
3. The Ld. CIT(A) erred in confirming the penalty u/s 271(1)(c) of the Act, without considering the fact that the quantum assessment itself was set aside by the Hon’ble ITAT and is pending for fresh adjudication before the CIT(A) and such levy is premature and unsustainable.
4. The Ld. CIT(A) ought to have appreciated the fact that the penalty notice issued u/s 274 r.w.s 271(1)(c) of the Act, did not specify whether the penalty was for concealment of income OR furnishing inaccurate particulars of income, rendering the penalty proceedings as void-ab-initio.
5. The Ld. CIT(A) failed to consider the fact that the AO erred in passing order u/s 271(1)(c) of the Act by levying penalty of Rs. 5,22,000/- when the appellant has neither resorted to concealment of any particulars of income nor furnished inaccurate particulars of income.
6. The Ld. CIT(A) ought to have appreciated the fact that no penalty u/s 271(1)(c) of the Act is leviable when the addition was made on estimate basis.
7. The Ld. CIT(A) failed to consider the fact that the AO failed to record mandated independent satisfaction regarding concealment of income during penalty proceedings.
8. The appellant may, add OR alter OR amend OR modify OR substitute OR delete and/OR rescind all OR any of the grounds of appeal at any time before OR at the time of hearing of the appeal.
3. At the time of hearing, the learned Authorised Representative of the Assessee has stated that the learned CIT(A) has passed the impugned order and confirmed the levy of penalty u/sec.271(1)(c) of the Act despite the fact that the quantum appeal filed by the assessee is still pending adjudication before the learned CIT(A). He has pointed out that this fact was also brought to the knowledge of the learned CIT(A) however, the learned CIT(A) has ignored the fact that the appeal filed by the assessee is pending adjudication. The learned CIT(A) has stated that the filing of the appeal and outcome of the same will not have any bearing on the penalty appeal. The learned Authorised Representative of the Assessee has filed copy of Form-35/Memo of Appeal filed before the learned CIT(A) as well as a copy of the screen shot of the e-processing portal of the department showing the appeal of the assessee as pending. Thus, the learned Authorised Representative of the Assessee has submitted that the impugned order of the learned CIT(A) be set aside and the matter be remanded to the record of the learned CIT(A) for deciding the appeal against the penalty order after the outcome of the appeal filed by the assessee against the assessment order.
4. On the other hand, the learned DR has relied upon the Order of the learned CIT(A).
5. We have considered the rival submissions as well as relevant material on record. The learned CIT(A) despite this fact brought to its notice that quantum appeal is still pending adjudication, has dismissed the appeal filed by the assessee against the penalty vide impugned order. The relevant part of the observation of the learned CIT(A) in Para nos.5.4 and 5.5 are as under:
“5.4. As regarding adjudication of the quantum appeal, there is no such pending appeal with me. Even, if the said quantum appeal is lying undisposed with some other CIT(A), the outcome of the same will not have any bearing upon the penalty appeal in view of section 275(1A) of the Act. In case the appellant gets relief in the quantum the penalty u/s 271(1)(c) of the Act the amount will be modified accordingly by the AO in view of the said section.
5.5. Considering the discussion made above, I find the Id AO was justified in imposing penalty and find no reason to alter his decision and accordingly confirm the penalty of Rs.5,22,000/-imposed u/s 271(1)(c) of the Act for concealing the particulars of income. In view of this, the grounds raised by the appellant are dismissed.”
5.1. The penalty u/sec.271(1)(c) is leviable only against the addition made by the Assessing Officer in the assessment proceedings and therefore, the outcome of the quantum appeal has a direct bearing on the levy of penalty u/sec.271(1)(c). Once this fact was brought to the notice of the learned CIT(A) that the quantum appeal is still pending adjudication, the learned CIT(A) ought to have decided the penalty appeal only after the outcome of the quantum appeal. The learned Authorised Representative of the Assessee has filed the status of the appeal filed by the assessee as per e-proceeding portal of the department showing the appeal is pending. Therefore, in the facts and circumstances of the case, when the quantum appeal is still pending adjudication before the learned CIT(A), the Order passed by the learned CIT(A) dismissing the appeal of the assessee against the penalty u/sec.271(1)(c) is not justified and the same is set aside. Accordingly, the matter is remanded to the record of the learned CIT(A) for adjudication of the appeal of the assessee against the penalty u/sec.271(1)(c) only after the outcome of the quantum appeal pending adjudication before the learned CIT(A). Needless to say, the assessee be given an opportunity of hearing before passing the fresh order.
6. In the result, appeal of the Assessee is allowed for statistical purposes.
Order pronounced in the open court on 03.07.2026.
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