Ruby Singh Vs DCIT (ITAT Delhi)
High Court Admits Question on Validity of Reassessment: Section 271(1)(c) Penalty Deleted
Confirmation of an addition by the Tribunal does not make concealment penalty automatic. Where the High Court has admitted substantial questions of law challenging the very jurisdiction to reopen the assessment, the foundation of the penalty remains in dispute. Applying this principle, the Delhi ITAT deleted penalties under Section 271(1)(c) for seven assessment years in Ruby Singh v. DCIT, ITA Nos. 2821 to 2827/Del/2026, decided on 29 September 2026.
Additions Sustained, Penalties Imposed
The assessee’s assessments for AYs 2013–14 to 2019–20 were reopened. Taking AY 2013–14 as the lead appeal, the Assessing Officer examined amounts of ₹25 lakh and ₹50 lakh received through bank transfers from accounts associated with two persons. The assessee furnished their bank statements, confirmations and details of their income-tax assessments. The AO also issued summons to them under Section 131, but received no response. He added the ₹75 lakh.
The AO further examined a credit entry in the assessee’s Standard Chartered Bank account and added ₹2.05 lakh as unexplained under Section 68. The assessee’s challenge to the additions failed before the Tribunal in the quantum proceedings.
The AO thereafter imposed penalty under Section 271(1)(c). In the lead year, the penalty was ₹23,11,500, levied at 100% of the tax sought to be evaded. His reasoning was substantially that the Tribunal had confirmed the additions and that the assessee had therefore furnished inaccurate particulars of income. The CIT(A) upheld the penalty, bringing the assessee back before the ITAT in seven penalty appeals.
