The present appeal arose from an order dated 02 June 2025 passed under Section 250 of the Income Tax Act, 1961 by the Commissioner of Income Tax (Appeals), NFAC, Delhi, whereby a penalty of ₹1,75,615 was confirmed under Section 271(1)(c) of the Act. The penalty had originally been imposed by the Assessing Officer in an ex-parte manner.

Aggrieved by the confirmation of penalty, the assesse preferred an appeal before the Income Tax Appellate Tribunal, Delhi Bench, challenging the levy on multiple grounds. It was noted that no one appeared on behalf of the assesse at the time of hearing; however, the Tribunal proceeded to adjudicate the matter after considering the submissions of the Departmental Representative.

Upon examination of the record, the Tribunal observed that the penalty proceedings had been conducted without granting adequate opportunity of being heard to the assesse. More importantly, it was noted that the quantum addition, which formed the very basis of the penalty, was still pending adjudication before the Commissioner of Income Tax (Appeals).

The Tribunal held that when the quantum proceedings are yet to attain finality, continuation of penalty proceedings is premature and unsustainable in law. Accordingly, the impugned penalty order was set aside and the matter was remanded to the file of the CIT(A) with a direction to adjudicate the penalty issue along with the quantum appeal. The Tribunal further clarified that the penalty shall remain in abeyance until the disposal of the quantum matter.

In view of these observations, the appeal was allowed for statistical purposes.

Source Link- https://itat.gov.in/public/files/upload/1767610584-XQSN2N-1-TO.pdf

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