ITAT Ahmedabad: 270A Penalty Proceedings Set Aside as Quantum Appeal Restored for Fresh Adjudication

Ketan Priyavadan Shah Vs ITO (ITAT Ahmedabad)

In the case before the Tribunal, Assessee had challenged a penalty levied u/s 270A, following what was alleged as “under-reporting of income” for assessment year 2020-21. The penalty order was confirmed by CIT(A) (NFAC) on 30 June 2025, amounting to ₹ 13,86,849. AO had initiated penalty proceedings and imposed the penalty based on the quantum of income determined in the assessment.

However, when the matter came before the Tribunal, it was noticed that the quantum appeal (ITA No. 734/Ahd/2025) for the same assessment year had already been restored to the file of the CIT(A) by an earlier order dated 14 August 2025. That earlier order directed the CIT(A) to decide the quantum matter de novo, giving the assessee a fresh opportunity of hearing, after condoning a delay of 114 days.

Since the penalty u/s 270A is directly connected and consequential to the quantum of income as assessed, the Tribunal observed that the penalty could not validly stand independently while the quantum issue remained sub judice. In view of this, the Tribunal held that the penalty proceedings must also be remitted to the CIT(A) for reconsideration, to be taken up along with the quantum appeal. The CIT(A) is to re-adjudicate afresh both the quantum and the penalty in accordance with law.

In effect, the Tribunal allowed the appeal for “statistical purposes,” meaning the case is sent back to ensure proper adjudication, but without deciding on the merits of the penalty until the quantum is finalized.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

This appeal is filed by the Assessee against the appellate order dated 30.06.2025 passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre(NFAC) relevant to the Assessment Year 2020-21.

2. The assessee has raised the following grounds of appeal:

1. The order passed by lower authorities is bad in law and required to be quashed.

2. Ld. NFAC erred in law and on facts in imposing penalty of Rs.13,86,849/- u/s.270A of the Act.

3. Ld. NFAC ought to have consider fact that AO failed to record satisfaction and accordingly penalty order is required to be quashed.

4. Ld. NFAC ought to have consider fact that issue on which penalty has been imposed are debatable issued and accordingly, no penalty is leviable.

3. At the outset, we noticed that quantum appeal bearing ITA No.734/Ahd/2025 for A.Y 2020-21 dated 14.08.2025 has been restored to file of Ld. CIT(A) for adjudication denovo. The relevant extract of the order is reproduced as below:

“…6.5 Considering the principles laid down by the Hon’ble Supreme Court and the interest of justice, we are of the considered view that the delay deserves to be condoned, and the matter restored to the Ld. CIT(A) for decision on merits.

Accordingly, we condone the delay of 114 days in filing the appeal before the Ld. CIT(A). The impugned order of the Ld. CIT(A)is set aside, and the matter is restored to his file with a direction to decide the appeal on merits, after affording reasonable opportunity of hearing to the assessee.

7. In the result, the appeal of the assessee is allowed for statistical purposes.…”

4. Since the quantum appeal has already been set-aside to the file of Ld. CIT(A) for deciding the issue on merits, this appeal involving penalty u/s.270A of the Act, is also set aside to the file of Ld.CIT(A).

5. In the result, the appeal of the assessee is allowed for statistical purposes.

The order is pronounced in the open Court on 07.10.2025