ITAT Lucknow Deletes Section 271AAC Penalty After Deletion of Section 69A Addition

ITO Vs Shyam Sagar Yadav (ITAT Lucknow)

The Income Tax Appellate Tribunal (ITAT), Lucknow, decided the Revenue’s appeal against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 19.04.2024 for Assessment Year 2017-18. The appeal challenged the deletion of a penalty of ₹60,29,841 levied under Section 271AAC(1) of the Income-tax Act, 1961, which had been imposed on the basis of an addition of ₹10,04,97,350 treated as unexplained money under Section 69A and taxed under Section 115BBE.

The Revenue’s appeal was filed with a delay of 34 days. The Tribunal considered the application for condonation of delay and found that the delay had occurred for bona fide reasons and was not attributable to negligence or inaction on the part of the Revenue. Accordingly, the delay was condoned and the appeal was admitted for hearing on merits.

At the outset, counsel for the assessee submitted that the Tribunal, in the quantum appeal, had already deleted the addition on which the penalty was based. It was pointed out that the ITAT, Lucknow Bench, by order dated 16.10.2025 in ITA No. 445/LKW/2024 for Assessment Year 2017-18, had deleted the addition made by the Assessing Officer. A copy of the Tribunal’s order in the quantum appeal was placed on record. The assessee therefore contended that, once the underlying addition no longer survived, the penalty levied under Section 271AAC(1) also could not survive.