Mumbai ITAT Deletes Penalty U/s 270A as Bombay HC Quashes Reassessment Notice Issued by Jurisdictional AO

Sambhav Pipes And Fittings Vs ITO (ITAT Mumbai)

Mumbai ITAT Deletes Penalty U/s 270A as Bombay HC Quashes Reassessment Notice Issued by Jurisdictional AO

Summary: The Mumbai ITAT allowed the assessee’s appeal and directed deletion of the penalty of ₹17,14,440 levied under Section 270A of the Income-tax Act for Assessment Year 2019-20. The assessee submitted that the Bombay High Court, in W.P. (L) No. 40898 of 2025 dated 16.12.2025, had set aside the notice issued under Section 148 and all proceedings arising from it on the ground that the notice had been issued by the Jurisdictional Assessing Officer instead of the Faceless Assessing Officer, following the decision in Hexaware Technologies Limited vs. ACIT. The Tribunal observed that, by virtue of the High Court’s order, the reassessment framed under Sections 147 read with 144B pursuant to the Section 148 notice had become null and void. Since the reassessment itself no longer survived, the Tribunal held that the penalty levied under Section 270A based on such reassessment also could not survive. Accordingly, it directed the Assessing Officer to delete the penalty under Section 270A and allowed the appeal.

The Mumbai ITAT deleted the penalty of Rs. 17.14 lakh levied u/s 270A after noting that the very reassessment on which the penalty was founded had been declared invalid by the Bombay High Court. The assessee pointed out that the reassessment notice u/s 148 had been issued by the Jurisdictional AO instead of the Faceless AO, contrary to the statutory scheme. The Bombay High Court, following its earlier decision in Hexaware Technologies Ltd. v. ACIT, had quashed the notice u/s 148 as well as all consequential proceedings arising therefrom.

The Tribunal observed that, pursuant to the High Court’s order, the reassessment framed u/s 147 r.w.s. 144B on the basis of the invalid notice had itself become null and void. Once the reassessment ceased to exist in the eyes of law, the penalty imposed on the basis of the additions made therein could not independently survive.

Holding that the foundation of the penalty had disappeared with the quashing of the reassessment proceedings, the ITAT directed the AO to delete the penalty levied u/s 270A for AY 2019-20. Accordingly, the assessee’s appeal was allowed.

Cases Discussed:

• Sambhav Pipes And Fittings Vs ITO (ITAT Mumbai)
• W.P. (L) No. 40898 of 2025, dated 16.12.2025
• Hexaware Technologies Limited vs. ACIT, (2024) 162 taxmann.com 225 (Bom.)

FULL TEXT OF THE ORDER OF ITAT MUMBAI

This appeal is filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“Ld. CIT(A)”] dated 08.01.2026 for the Assessment Year 2019-20 in sustaining the penalty of Rs.17,14,440/- levied u/s 270A of the Act.

2. Ld. Counsel for the assessee, referring to pages 1 to 4 of the paper book, submitted that on a petition filed by the assessee challenging the notice issued u/s 148 of the Act on the ground that such notice had been issued by the Jurisdictional Assessing Officer instead of the Faceless Assessing Officer, as mandated by law, the Hon’ble Bombay High Court in W.P. (L) No. 40898 of 2025, dated 16.12.2025, following the decision of the Division Bench in the case of Hexaware Technologies Limited vs. ACIT, reported in (2024) 162 taxmann.com 225 (Bom.), set aside the impugned notice issued u/s 148 of the Act and all other proceedings/orders emanating therefrom. Ld. Counsel for the assessee submitted that, in view of the decision of the Hon’ble Bombay High Court, the assessment framed against the assessee u/s 147 r.w.s. 144B, dated 27.02.2025 based on the said notice issued u/s 148 dated 25.04.2023, will not survive.

3. On hearing both the sides and perusing the order of the Hon’ble Bombay High Court in W.P. (L) No. 40898 of 2025, dated 16.12.2025, it is observed that the assessee had challenged the notice issued u/s 148 of the Act dated 25.04.2023 on the ground that such notice was issued by the Jurisdictional Assessing Officer instead of the Faceless Assessing Officer. The Hon’ble Bombay High Court, following its order in the case of Hexaware Technologies Limited vs. ACIT (supra), had set aside the impugned notice u/s 148 dated 25.04.2023 and all other proceedings emanating therefrom. By virtue of this order of the Hon’ble Bombay High Court, the reassessment framed by the Assessing Officer u/s 147 r.w.s. 144B of the Act, dated 27.02.2025, pursuant to the notice issued u/s 148 dated 25.04.2023, has become null and void.

4. Since the reassessment framed u/s 147 r.w.s. 144B has become null and void, the penalty levied based on such addition has no legs to stand. Consequently, the penalty levied u/s 270A of the Act will not survive. Thus, we direct the Assessing Officer to delete the penalty levied u/s 270A for the assessment year 2019-20.

5. In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 10/07/2026