Penalty u/s 271D Unsustainable if Assessment Itself is Invalid: ITAT Pune

Karia Builders Vs ITO (ITAT Pune) The Income Tax Appellate Tribunal (ITAT), Pune Bench, has nullified a Rs 1 crore penalty imposed on Karia Builders, ruling that the penalty proceedings were invalid due to fundamental legal flaws in the underlying assessment. The decision, dated July 23, 2025, in the case of Karia Builders v. Income Tax Officer (ITA No. 2401/PUNE/2024), underscores two key legal principles: a penalty cannot stand if the assessment order it is based on is itself bad in law, and the validity of assessment proceedings can be challenged during the penalty appeal. The case arose fr...