ITAT Directs AO to Revisit Penalty Proceedings After Completion of de novo assessment [Read Order]
The tribunal held that although the original assessment was not quashed but merely remanded for fresh adjudication, the penalty proceedings could not stand independently.
![ITAT Directs AO to Revisit Penalty Proceedings After Completion of de novo assessment [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/04/De-novo-Assessment.jpg "ITAT Directs AO to Revisit Penalty Proceedings After Completion of de novo assessment [Read Order]")
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the penalty of Rs. 10.22 lakh imposed under Section 271(1)(c) of the Income Tax Act, after observing that the assessment order had already been remanded for fresh adjudication. Krupal Vikrambhai Patel (assessee), the penalty was levied in respect of additions amounting to Rs. 35,65,526 on account of...
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the penalty of Rs. 10.22 lakh imposed under Section 271(1)(c) of the Income Tax Act, after observing that the assessment order had already been remanded for fresh adjudication.
Krupal Vikrambhai Patel (assessee), the penalty was levied in respect of additions amounting to Rs. 35,65,526 on account of unexplained investment and cash deposits. The original assessment had been completed ex parte under Section 144 r.w.s. 147 on 07.12.2018.
The Assessing Officer (AO) initiated penalty proceedings under Section 271(1)(c) and imposed a penalty equivalent to 100% of the tax sought to be evaded, amounting to Rs. 10,22,126.
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Aggrieved by the penalty, the assessee challenged the order before the Commissioner of Income Tax (appeals)[CIT(A)], who confirmed the penalty. Aggrieved by the CIT(A)’s order, the assessee filed an appeal before the ITAT.
The assessee contended that the coordinate bench of the ITAT in ITA No. 1507/Ahd/2024 had already set aside the original assessment order, directing the AO to reframe the assessment de novo after affording proper opportunity to the assessee. The assessee contended that the penalty imposed on the basis of a non-existent assessment order ought to be cancelled.
The Revenue argued that since the assessment had been remanded to the AO, the penalty matter should also be remanded for reconsideration in light of the outcome of the fresh assessment.
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The two-member Bench comprising Siddhartha Nautiyal (Judicial Member) and Narendra Prasad Sinha (Accountant Member) held that although the original assessment was not quashed but merely remanded for fresh adjudication, the penalty proceedings could not stand independently.
The tribunal ruled that the penalty matter deserved to be set aside. The tribunal observed that the matter may be remanded to the AO for fresh consideration.
The tribunal remanded the penalty issue to the file of the AO for fresh consideration upon completion of the revised assessment proceedings.
The appeal filed by the assessee was allowed for statistical purposes.
To Read the full text of the Order CLICK HERE
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