Penalty Proceedings Cannot Be Decided Before Disposal of Quantum Appeal: ITAT Restores Matter for Fresh Adjudication [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, restored the penalty appeal to the file of the CIT(A) after noting that the related quantum appeal was still pending adjudication.

The assessee, Basti Sugar Mills Co. Ltd., now known as Phenil Sugar Limited, was subjected to penalty proceedings by the Assessing Officer. However, the CIT(A) deleted the penalty imposed under Section 271(1)(c) of the Income Tax Act.

Aggrieved by the deletion of penalty, the Revenue filed an appeal before the Tribunal contending that the order of the CIT(A) was not sustainable.

Both parties submitted that the quantum appeal relating to the relevant assessment year was still pending before the CIT(A). It was pointed out that the issues arising in the penalty proceedings were directly connected with the outcome of the quantum proceedings.

The Tribunal, comprising Yogesh Kumar U.S. (Judicial Member) and Manish Agarwal (Accountant Member), observed that the penalty appeal could not be independently decided before adjudication of the connected quantum appeal.

Accordingly, the Tribunal set aside the order of the CIT(A) and restored the penalty appeal to the file of the CIT(A) with a direction to decide the same along with or after disposal of the pending quantum appeal.

The Revenue’s appeal was partly allowed for statistical purposes.

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