Malkit Kaur Vs ITO (ITAT Chandigarh)
Penalty can’t survive when quantum is unsettled: ITAT Chandigarh remands 271 penalty to await fate of addition
Chandigarh Tribunal held that penalty proceedings cannot attain finality when the very quantum addition forming the foundation of penalty stands remanded. Tribunal noted that the quantum addition had already been set aside & remanded to CIT(A) by ITAT vide order dated 30-05-2025. Since penalty is merely an offshoot of quantum proceedings, confirmation of penalty by CIT(A)/NFAC without awaiting outcome of quantum appeal was held to be untenable. Accordingly, Tribunal set aside penalty order & remanded matter back to CIT(A) with direction to decide penalty only after adjudication of quantum appeal, observing that if quantum addition fails, penalty shall automatically stand aborted. Appeal of Assessee was allowed for statistical purpo
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
This is the appeal filed by the assessee feeling aggrieved by the order dated 14.08.2025 passed by the ld.CIT (Appeals) confirming the penalty in the hands of the assessee.
2. The assessee has raised the following grounds of appeal :
“1.That the order passed by the Commissioner of Income Tax Appeal (s) NFAC is bad in law and against facts of the case.
2. That the Commissioner of Income Tax Appeal (s) NFAC is not justified in upholding the penalty order without considering the order of the Hon’ble ITAT dated 30.05.2025 which was brought to his knowledge during the appellate proceedings. The order of the CIT (A) is 14.08.2025, i.e. later than the order of the Hon’ble ITAT.
3. That the Ld. Commissioner of Income Tax Appeal (s) NFAC is not justified in confirming the penalty order without adhering to the directions given by the Hon’ble ITAT.
4. That Ld. Commissioner of Income Tax Appeal (s) NFAC is erred in upholding the penalty order without recording satisfaction that there was concealment of particulars of income or inaccurate particulars of income was furnished by the appellant.
5. That the Ld. Commissioner of Income Tax Appeal (s) NFAC is erred in confirming the penalty, wherein source of investment was fully explained.
6. That Ld. Commissioner of Income Tax Appeal (s) NFAC is not justified in confirming the penalty order wherein the legal issue regarding issuance of notice u/s 148 by JAO/FAO was involved and the ground of appeal was not adjudicated upon.
7. The appellant Craves leave to add, amend or delete any of the ground (s) of appeal before it is finally heard.
3. At the outset, ld. AR has fairly submitted that the quantum addition made by the ld. AO and confirmed by the ld.CIT (Appeals) was remanded back by the Tribunal vide order dated 30.05.2025 passed in ITA 43/CHD/2025 and therefore, it would be in the fitness of facts that if the present penalty proceedings be also remanded back to the file of the ld.CIT (Appeals) to decide the issue alongwith the decision of the quantum appeal by the ld.CIT (Appeals).
