Vikram Sugriv Kale Vs ITO (ITAT Pune)
Penalty Cannot Survive After Deletion of Quantum Addition: ITAT Pune Cancels Penalty u/s 271AAC Despite No Appeal Against Penalty Order
The Pune Bench of the ITAT allowed the assessee’s appeal for AY 2018-19 and deleted the penalty of ₹2.67 lakh levied u/s 271AAC(1), holding that once the underlying quantum addition is deleted, the penalty has no legs to stand. In the present case, the CIT(A)/NFAC had already deleted the entire addition on merits, and the Revenue had not challenged that deletion. Despite this, the Assessing Officer refused to cancel the penalty on the technical ground that section 275(1A) uses the word “may” and therefore did not mandate suo motu cancellation.
The Tribunal rejected this hyper-technical approach and held that the very foundation of the penalty had disappeared with the deletion of the quantum addition. It observed that the Assessing Officer ought to have cancelled the penalty suo motu, and the CIT(A)/NFAC erred in dismissing the assessee’s appeal on the ground that the AO’s refusal was merely an administrative action. Emphasising substance over form, the ITAT directed deletion of the penalty, notwithstanding the fact that the assessee had not filed a separate appeal against the original penalty order. The appeal was accordingly allowed.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal filed by the assessee is directed against the order dated 12.11.2025 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2018-19.
