Murmu Pankaj Kumar Vs ITO (ITAT Bangalore)
In a recent ruling, the Income Tax Appellate Tribunal (ITAT), Bengaluru, has set aside a penalty order issued against taxpayer Murmu Pankaj Kumar, deeming it premature. The penalty, imposed under Section 271(1)(c) of the Income Tax Act, 1961, was issued while the assessee’s appeal against the original assessment order was still pending before the Commissioner of Income Tax (Appeals) [CIT(A)]. The ITAT’s decision highlights a procedural issue where a penalty cannot be finalized before the underlying tax liability is definitively determined.
The case involves Murmu Pankaj Kumar, a pilot with Air India, who had not filed his original income tax return for the assessment year 2016-17. He subsequently filed a return in response to a notice under Section 148, declaring a total income of Rs. 37,42,310. However, the Assessing Officer (AO) completed the assessment and made additions totaling Rs. 6,31,125. These additions included a disallowed deduction of Rs. 2,400 under Section 80D and an unexplained investment of Rs. 6,28,725 under Section 69. Based on this revised income of Rs. 43,73,435, the AO raised a demand of Rs. 5,43,487 and initiated penalty proceedings. The assessee filed an appeal with the CIT(A) against the assessment order on July 3, 2024, but while that appeal was still pending, the AO issued an ex-parte penalty order on July 16, 2024, imposing a penalty of Rs. 1,95,022 for furnishing inaccurate particulars of income. The CIT(A) subsequently upheld the penalty, which led to the assessee’s appeal before the ITAT.
