JM Chemical Co. vs ACIT

PER MADHUMITA ROY, JM:

These four appeals filed by the assessee are directed against the order dated 24.11.2025 passed by the ld. Commissioner of Income-tax - NFAC, Delhi [hereinafter referred to as the Ld. CIT(A)] under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of the penalty order dated 22.03.2025 passed by the Assessment Unit, Income Tax Department, New Delhi (hereinafter referred to as ‘the ld. AO’) u/s. 271(1)(c) of the Act for Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15.

Since all the three appeals relates to the same assessee, these are heard analogously and are being disposed of by a common order.

At the time of hearing of the instant appeals learned Counsel appearing for the assessee submitted before us that the quantum orders out of which six penalty proceedings was initiated, ultimately, challenged before the ITAT against the confirmation of such order by the learned CIT(A). The Co-ordinate Bench by its order dated 18.03.2026 have been pleased to set aside the appeal to the file of the Learned AO to decide and determine the controversy raised towards issuance of notice under section 143(2) of the Act for assumption of jurisdiction at the stage of issuance of such notice. According to him, since the quantum order has been quashed and set aside to the file of the Learned AO for fresh adjudication as directed and narrated hereinabove as on date the penalty proceedings had not survived and therefore, the order passed by the Learned AO under section 271(1)(c) of the Act further, confirmed by the First Appellate Authority is non-est in the eyes of law and thus liable to be quashed.

On the other hand, it was contended by the Learned DR that, since, quantum has been set aside to the file of the Learned AO, the penalty orders are also required to be set aside to the file of the Learned AO for adjudication for the same.

We have heard the parties and also perused the relevant records and order passed by the Coordinate Bench in ITA Nos.768, 769, 770 & 787/Del/2024 wherein while setting aside the issue to the Learned AO has observed as under:

Thus, having heard the Learned Counsels appearing for the parties and having regard to the facts and circumstances of the matter, we are of the view that since the order passed by the Learned AO being quashed and set aside to him for fresh adjudication of the same, no order passed under section 271(c) of the Act arising out of the quantum order so quashed and set aside is surviving as on date. Suffice to say that the order passed by the Learned AO u/s 271(1)(c) of the Act further confirmed by the First Appellate Authority has no force rather infructuous as the very basis of the said order being quantum orders since quashed and set aside to AO for denovo assessment. We, therefore, allow these appeals for statistical purposes holding the orders passed by the Learned AO and confirmed by the First Appellate Authority under Section 271(c) of the Act are non-est in the eyes of law and dismissed as infructuous. However, we further grant liberty to the Learned AO to take a call to proceed against the assessee under Section 271(c) of the Act only in the event if it is found on the basis of the order to be passed on the denovo proceedings by the Learned AO in ITA Nos.768, 769, 770 & 787/Del/2024 as remanded to his file for fresh adjudication.

In the result, assessee’s appeals are, therefore, allowed for statistical purposes in the manner indicated above.