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Judgment
Per Mahavir Singh, Vice President :
These seven appeals by the assessee are arising out of different orders of CIT(A)-24, New Delhi, all dated 6th January, 2026. Assessments were framed by the ACIT, Central Circle-8, Delhi for the assessment years 2013-14 to 2018-19 under Section 147 read with Section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), vide orders dated 8th February, 2022. The penalties under dispute were levied by the ACIT, Central Circle-8, Delhi for all the assessment years from 2013-14 to 2018-19 vide orders under Section 271(1)(c) of the Act, all dated 29th November, 2023.
A common issue is involved in all the seven appeals. Hence, we are disposing of these appeals vide this common order, and will take up the facts and grounds from ITA No.2827/Del/2026 for the assessment year 2013-14.
The only issue in this appeal of the assessee is as regards the levy of penalty confirmed by the learned CIT(A) under Section 271(1)(c) of the Act read with Section 274 of the Act, which is unsustainable and untenable in law. For this, the assessee has raised the following propositions:-
that there is no precise charge viz., whether the penalty was levied for concealment of income or furnishing inaccurate particulars of income.
whether the penalty can be levied when the question of law has been admitted by the Hon'ble High Court.
whether when the assessment proceedings are challenged but quantum is sustained by the Tribunal, the penalty is automatic or it can be decided independently.
that the Assessing Officer has not allowed proper opportunity of being heard and thereby violated principles of natural justice.
The brief facts are that the Assessing Officer framed assessment under Section 147 read with Section 143(3) of the Act and noted that the assessee has received an amount of ₹25 lakhs and ₹50 lakhs on transfer of joint account of Shri Dalpat Singh and Shri Ummed Singh from their bank account maintained with Bank of Baroda and State Bank of Bikaner & Jaipur. The assessee filed bank statements of Shri Dalpat Singh and Shri Ummed Singh from where the assessee has received the amounts on transfer and also the details of income tax assessments of these two persons and confirmation. The Assessing Officer issued summons under Section 131 of the Act to the creditors viz., Shri Dalpat Singh and Shri Ummed Singh but, there was no response. Therefore, the Assessing Officer added this amount of ₹75 lakhs. Similarly, the assessee was having credit entry of ₹2,96,000/- in Standard Chartered Bank and out of that, the Assessing Officer added a sum of ₹2,05,000/- which remained unexplained under Section 68 of the Act. The quantum appeal up to the Tribunal was dismissed. In the meantime, the Assessing Officer initiated penalty proceedings under Section 271(1)(c) read with Section 274 of the Act and levied the penalty on the premise that the quantum addition has been confirmed by the Tribunal and therefore, the assessee has furnished inaccurate particulars of her income and therefore, levied the penalty at 100% amounting to ₹23,11,500/-. Aggrieved, the assessee preferred appeal before the learned CIT(A).
Learned CIT(A) also confirmed the action of the Assessing Officer by observing in paragraph Nos.6.3.2 and 6.4 as under:-
“6.3.2Furthermore, the penalty order dated 29.11.2023 has been passed with prior approval of Additional Commissioner of Income Tax, Central Range-2, New Delhi under section 274(2) of the Income Tax Act, 1961, which is duly mentioned in paragraph 10 of the penalty order. The appellant was provided opportunities at appellate stage to substantiate this ground with evidence and arguments, but failed to respond to any of the notices issued by this office, except for filing adjournment request. In absence of any submission or material from the appellant’s side to demonstrate that satisfaction was not recorded or that the penalty was levied without jurisdiction, I find this ground to be devoid of merit. The Ground No.4 is therefore dismissed and the order of the AO is upheld.
6.4In Ground No.5, the appellant has contended that the furthermore the learned Assistant Commissioner of Income Tax has erred both in law and on facts in mechanically imposing the penalty on the basis of findings in the order of assessment dated 8.2.2022 under section 147/143(3) of the Act. In Ground No.6, the appellant has contended that the Assistant Commissioner of Income Tax has failed to appreciate that, mere fact that certain addition made have been confirmed in appeal by the Hon’ble Income Tax Appellate Tribunal could not automatically warrant the levy of penalty under section 271(1)(c) of the Act. In Ground No.7, the appellant has contended that the Assistant Commissioner of Income Tax has failed to appreciate the factual matrix of the case of the appellant and evidence on record and conclusions thus drawn mechanically are wholly unjustified. It is therefore, prayed that it be held that penalty so levied is invalid and therefore, may kindly be deleted and appeal of the appellant be allowed.
Aggrieved, now the assessee is in appeal before the Tribunal.
At the outset, learned Counsel before us filed copy of order dated 27th March, 2025 of Hon'ble Delhi High Court, wherein, in quantum appeals in ITA 154/2024 and CM Appl.13590/2024 and others, Hon'ble Delhi High Court has admitted substantial question of law, as under:-
“ITA 154/2024
“B. Whether the Tribunal was justified in dismissing the appeal of the Appellant when reassessment proceedings were initiated on the basis of no tangible material against the Appellant available with the Assessing Officer?
C. Whether the Tribunal was justified in dismissing the appeal of the Appellant when the reassessment proceedings were initiated by the Assessing Officer under section 147 of the Income Tax Act on the basis of no valid ‘reason to believe’ and more so on the basis of the ‘reason to suspect’?”
ITA 155/2024
ITA 156/2024
ITA 157/2024
ITA 158/2024
ITA 159/2024
ITA 161/2024
“A. Whether the Tribunal was justified in dismissing the appeal of the Appellant when reassessment proceedings were initiated on the basis of no tangible or intangible material available against the Appellant with the Assessing Officer?
B. Whether the Tribunal was justified in dismissing the appeal of the Appellant when reassessment proceedings were initiated by the Assessing Officer under section 147 of the Income Tax Act on the basis of no valid 'reason to believe' and more so on the basis of the 'reason to suspect'?
2.List for hearing on 08.05.2025.
Learned Counsel for the assessee stated that further Hon'ble Delhi High Court, vide order dated 24th February, 2026 in ITA No.154/2024 & CM Appl. 13590/2024 and others, has given a finding that in regard to assumption of jurisdiction by the Assessing Officer on impugned additions, if assessment order would go, even the finding of concealment recorded by the Assessing Officer in the assessment order too shall be without basis. Hon'ble Delhi High Court has recorded its finding in paragraph Nos.4 to 6, as under:-
'4. Having heard learned counsel for the parties, we are of the view that in case the assumption of jurisdiction by the AO is found to be not in accordance with law, not only the impugned assessment orders dated 08.02.2022 passed under Section 147 of the Act of 1961 in furtherance of the notice dated 01.01.2021 under section 148 of the Act of 1961 would go, even the finding of concealment recorded by the Assessing Officer (AO) in the assessment order too would be without basis.
5.In the instant factual backdrop when the appeals have been admitted, it will be iniquitous to proceed against the appellant on the allegation of concealment of income, more particularly, when the entire tax amount has been deposited by the appellant.
6.Such being the position, we hereby stay the recovery of the penalty so also the prosecution in furtherance of the impugned assessment orders."
In terms of the above, learned Counsel for the assessee argued that when the substantial question of law is admitted by Hon'ble Delhi High Court in regard to quantum additions, the penalty will not survive because the issue becomes debatable. Learned Counsel relied on the decision of Hon'ble Delhi High Court in the case of The Commissioner of Income Tax II Vs. Liquid Investment and Trading Co. in ITA 240/2009, order dated 5th October, 2010, wherein it is held as under:-
“Both the CIT(A) as well as the ITAT have set aside the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961 on the ground that the issue of deduction under Section 14A of the Act was a debatable issue. We may also note that against the quantum assessment where under deduction under Section 14A of the Act was prescribed to the assessee, the assessee has preferred an appeal in this Court under Section 260A of the Act which has also been admitted and substantial question of law framed. This itself shows that the issue is debatable. For these reasons, we are of the opinion that no question of law arises in the present case.”
Further, Hon’ble Delhi High Court in the case of Principal Commissioner of Income Tax, (Central)-2 Vs. Harsh International (P.) Ltd. – (2021) 128 taxmann.com 88 (Delhi) has also considered the issue that once the High Court has framed substantial question of law in appeal preferred by the assessee challenging addition itself, alleged concealment was not final and the issue became debatable and therefore, penalty under Section 271(1)(c) of the Act will not survive. Hon’ble Delhi High Court, relying on the decision of Hon’ble Bombay High Court in the case of CIT Vs. Advaita Estate Development Private Limited in ITA No.1498 of 2014 dated 17th February, 2017, has held as under:-
“9.Having heard the learned counsel for the appellant and having perused the impugned order, this Court is of the view that the ITAT was right in deleting the penalty levied under Section 271(1)(c) of the Act. It has to be noted that penalty proceedings are an outcome of assessment and if the assessment itself is debatable, the penalty proceedings cannot survive.
10.This court is also of the opinion that levy of penalty cannot be a matter of course, as sought to be contended by the Revenue. It can only be levied in cases where the concealment of income has been proven. If the quantum order itself has been challenged and this Court has framed substantial questions of law in the appeal preferred by the respondent- assessee, it shows that the alleged concealment is not final and the issue is disputable. Consequently, the penalty levied by the assessing officer cannot survive in such a case.
11.It is pertinent to note that this Court in similar cases [CIT Vs. Liquid Investment Ltd, ITA 240/2009, CIT Vs H B Leasing & Finance Co. Ltd. I.T.A. No. 1612/2010 and CIT Vs. Thomson Press India Ltd, ITA 426,440/2013] has upheld the deletion of the penalty on the same ground i.e. the fact that appeals were admitted proved that the issue was debatable. The relevant portion of the orders in CIT Vs. Liquid Investment Ltd (supra) and CIT Vs. Thomson Press India Ltd(supra) is reproduced hereinbelow:-
A) Order dated 5th October, 2010 passed by this Court in CIT Vs. Liquid Investment Ltd (supra) :-
" Both the CIT(A) as well as the ITAT have set aside the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961 on the ground that the issue of deduction under Section 14A of the Act was a debatable issue. We may also note that against the quantum assessment where under deduction under Section 14A of the Act was prescribed to the assessee, the assessee has preferred an appeal in this Court under Section 260A of the Act which has also been admitted and substantial question of law framed. This itself shows that the issue is debatable. For these reasons, we are of the opinion that no question of law arises in the present case."
B) Order dated 3rd March, 2014 passed by this Court in CIT Vs. Thomson Press India Ltd(supra) :-
"This Court is of the opinion that where the question of law as raised by the assessee has been framed and admitted in the circumstances of this case, imposition of penalty cannot be justified. The appeals being bereft of substantial question of law are dismissed."
12.Keeping in view the aforesaid, this Court finds that no question of law arises in the present appeals for consideration of this Court."
In the present case also, the facts are identical that Hon'ble Delhi High Court has admitted the substantial question of law against quantum addition in all these seven assessment years, hence, the penalty levied by the Assessing Officer has become debatable and once it has become debatable, the penalty cannot survive. Accordingly, we hold that the penalty levied is untenable in law and hence, deleted.
As regards remaining six appeals of the assessee, both the sides agreed that the facts in these appeals are identical to the facts in ITA No.2827/Del/2026. Therefore, the findings given by us while deciding the said appeal of the assessee in ITA No.2827/Del/2026 would mutatis mutandis apply to these appeals as well. As we have already deleted the penalty levied in ITA No.2827/Del/2026, the penalties levied in remaining six appeals are also directed to be deleted, being not sustainable in law.
In the result, all the appeals of the assessee are allowed. Decision pronounced in the open Court on 29th September, 2026.