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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
This captioned appeal is filed by the Revenue against the order of Learned Commissioner of Income Tax (Appeals)-23, Delhi dated 10.11.2025 under section 250 of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) arising from the penalty order dated 26.07.2024 by the ACIT, Central Range-1, New Delhi under section 271D of the Act for the Assessment Year 2021-22.
The Revenue has raised the following grounds of appeal:
1.“The Ld. CIT(A) has erred in deleting the imposed penalty of Rs. 94,00,000/- w/s 271D of the Income-tax Act, 1961.
2.The Ld. CIT(A) has failed to appreciate that during the assessment proceedings, the assessee had not submitted anything about the cash transaction made in contravention of Section 269SS of the Act.
3.Ld. CIT(A) has failed to appreciate that the penalty proceedings u/s 271D of the Act is independent from assessment proceedings. Proceedings u/s 271D of the Act gets triggered even without proceedings u/s 143(3) as both the proceedings are delinked.
4.The Ld. CIT(A) has erred in invoking section 271DA to invalidate penalty u/s 271D and deleted the penalty u/s 271D by placing reliance upon Hon'ble Supreme Court's order in the case of CIT vs. Jai Laxmi Rice Mills.
5.The Ld. CIT(A) has ignored that the penalty order was passed by the Addl. Commissioner, who was the statutory authority under Section 271D of the Act. The requirement of AO satisfaction is therefore irrelevant for initiation of penalty.
6.The appellant craves to add or amend any/all the grounds of appeal before or during the hearing of the appeal.”
This is the case of penalty imposed u/s 271D of the Act which was deleted by the CIT(A) dated 10.11.2025. Briefly, in this case, under the quantum proceedings, the AO had made additions of Rs 94,00,000/- u/s 45 of the Act on account of cash consideration received on sale of property at Second Floor, E-92, Preet Vihar, Delhi and Rs. 2,50,000/- u/s 69C towards commission.
At the outset, it was submitted that the quantum appeal in the assessee's case has already been allowed by the Hon'ble "A" Bench of ITAT Delhi via order dated 10.07.2024, in ITA Nos 3074/DEL/2023, deleting the above additions in the case. It was argued that penalty Proceedings u/s 271D of the Act are liable to be quashed in cases where the appeals against Quantum Additions, on the basis of which such Penalty is imposed, are allowed.
Per contra, the ld DR relied on the order of AO.
We have heard the rival submissions and perused the material available on record. We find that assessment order making quantum addition had been quashed by the ITAT, Delhi Benches in the assessee’s case via order dated 10.07.2024, in ITA Nos 3074/DEL/2023. As the quantum addition made in assessment order has been quashed, there is no scope of surviving the penalty order u/s 271D of the Act, in view of the decision of Hon’ble Supreme Court in the case of CIT vs. Jai Laxmi Rice Mills, 2015 (11) TMI 1453 which observed as follows:
"The Tribunal as well as the High Court has held that it could not be so for the simple reason that when the original assessment order itself was set aside, the satisfaction recorded therein for the purpose of initiation of the penalty proceeding under Section 271E would also not survive. This according to us is the correct proposition of law stated by the High Court in the impugned order. Accordingly, the Revenue’s appeal is dismissed.
In the result, appeal of the Revenue in ITA No.1195/Del/2026 is dismissed.