Abdulwahid Abdulkarim Qureshi Vs ITO (ITAT Pune)
Penalty Cannot Survive Without Quantum Addition: Section 271(1)(c) Levy Deleted
The Pune Bench of the Income Tax Appellate Tribunal (ITAT) deleted the penalty of ₹47.94 lakh levied under section 271(1)(c), holding that once the underlying quantum addition itself is deleted, the penalty has no legs to stand on.
In this case for AY 2016-17, the Assessing Officer had levied penalty at 100% of tax sought to be evaded on an addition of ₹1.38 crore, treated as unexplained cash credit under section 68. The CIT(A)/NFAC had confirmed the penalty. However, during the hearing before the Tribunal, it was brought on record that the same addition had already been deleted by the ITAT in the assessee’s own case for AYs 2016-17 and 2017-18 by an earlier order dated 06.08.2025.
The Revenue fairly conceded that since the quantum addition no longer survived, the very foundation of the penalty stood removed. The Tribunal reiterated the settled legal position that penalty proceedings are consequential in nature, and where the basis of addition is knocked down, the penalty automatically collapses.
Accordingly, the ITAT set aside the orders of the lower authorities and directed deletion of the entire penalty, allowing the appeal of the assessee in full.
FULL TEXT OF THE ORDER OF ITAT PUNE
