Sangeeta Gupta vs ITO, Ward 58(7)

Per Ramit Kochar, AM

This appeal in ITA No. 469/Del/2026 for assessment year 2011-12 has arisen from appellate order dated 26.11.2024 passed by the learned CIT(A), NFAC, Delhi, under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) (DIN & Order No. ITBA/NFAC/S/250/2024-25/107064072(1)), which in turn has arisen from penalty order dated 26.06.2019 passed by the learned Assessing Officer u/s 271(1)(c) of the 1961 Act .

At the outset, it is observed that this appeal is filed by the assessee with the Tribunal belatedly by around 349 days beyond the time stipulated under Section 253(3) of the Act. The assessee has duly filed application for condonation of delay , praying for condoning the delay in filing this appeal belatedly beyond the time prescribed u/s 253(3) of the 1961 Act. It is prayed that the ld. CIT(A) has vide appellate orders dated 26.11.2024 against quantum assessment has set aside and remanded the matter to the ld. AO for denovo assessment, in exercise of his powers u/s 251(1)(a) of the 1961 Act. The appeal against penalty order was also decided by ld. CIT(A) vide orders dated 26.11.2024, wherein relying on the decision against quantum appeal, it was held by ld. CIT(A) that the appeal against penalty order has become infructuous . It is stated in the application that the assessee applied for VSVS 2024 scheme on 28.01.2025, which application was summarily rejected by department. The assessee filed representation with department, which is not replied with till date by department. The assessee received communication from department on 01.12.2025 that notice u/s 142(1) is not complied with , and at this stage the assessee became aware that VSVS,2024 application is finally rejected and/or assessee representation against rejection is also not to be proceeded with by the Department . It is averred by ld. Counsel for the assessee that till then,the assessee was having bonafide belief that her VSVS, 2024 application is pending and is proceeded with by the department. Then , on taking advise from tax-consultant, the assessee was informed that ld. CIT(A) has not adjudicated legal grounds , and hence since she is filing appeal with the Tribunal against quantum assessment framed by the AO and its adjudication by ld. CIT(A), and also the assessee was advised that she must also file appeal with the Tribunal against penalty levied by the AO and as adjudicated by ld. CIT(A). Then on 16^th January, 2026, she filed an appeal with the ITAT, Delhi Benches against the penalty levied by the AO and as adjudicated by ld. CIT(A) order . It was submitted by ld. Counsel for the assessee that the assessee was pursuing alternate legal remedy of resolving her dispute under VSVS, 2024 scheme bonafidely , which led to delay in filing appeal with ITAT. Thus, it was prayed that delay in filing this appeal belatedly with ITAT by 349 days, be condoned. The ld. Sr. DR objected to condoning the aforesaid delay, but fairly left the matter for the Bench to decide. After hearing both the parties and perusing the material on record, We hereby condone the delay of 349 days in filing this appeal belatedly by the assessee beyond the time prescribed under Section 253(3) of the Act, and proceed to adjudicate this appeal on merits in accordance with law. When substantial justice is pitted against technicalities, the Courts will lean towards advancement of substantial justice, unless malice is at writ large or there is gross negligence. We donot see any malice on the part of the assessee or gross negligence on the part of the assessee in filing this appeal belatedly beyond time prescribed u/s 253(3) as the assessee is not likely to gain any thing by filing this appeal belatedly by 349 days beyond the time prescribed u/s 253(3). Reliance is placed on judgment and order of Hon’ble Supreme Court in the case of Collector , Land Acquisition , Anantnag v. Mst. Katiji & Ors. 1987 (2) SCC 107.

The brief facts of the case are that the assessment has been framed in the case of the assessee u/s 144 r.w.s. 147 of the 1961 Act by the AO, wherein additions to the tune of Rs.25,94,355/- were made by the AO , vide orders dated 24.12.2018. The assessee has not filed return of income originally u/s 139 of the 1961 Act. Reasons for reopening were recorded by the AO. Notice u/s 148 dated 26.03.2018 was issued by the AO to the assessee. The assessee did not file return of income in pursuant to notice u/s 148 of the 1961 Act issued by the AO. Statutory notices u/s 142(1) and SCN’s were issued by the AO from time to time during reassessment proceedings, which also remained uncomplied with by the assessee. The additions were made by AO to the income of the assessee based on deposits made by her in her saving bank account , to tune of Rs. 20,94,355/- , of which sources remained unexplained by the assessee. There were further additions to the tune of Rs.5,00,000/-made by the AO to the income of the assessee being estimation of business income for the previous year relevant to the impugned assessment year. This led to invocation by the AO of penalty proceedings u/s 271(1)(c) against the assessee, which culminated into penalty order dated 26.06.2019 passed by the AO, wherein the AO imposed penalty of Rs.6,48,187/- against the assessee. Aggrieved by quantum assessment, the assessee filed first appeal with ld. CIT(A), and in exercise of powers u/s 251(1)(a) of the 1961 Act, the ld. CIT(A) remitted the matter back to the file of the AO for denovo assessment. The assessee also filed appeal with ld. CIT(A) against aforesaid penalty order dated 26.06.2019, and ld. CIT(A) in view of his decision in quantum , held that penalty levied by the AO has become infructuous. The appeal of the assessee stood dismissed by ld. CIT(A). It was also observed by ld. CIT(A) that the AO may levy penalty , if deemed fit based on the outcome of the set aside assessment. In the meantime, the assessee filed appeal with the Tribunal against both the orders passed by ld. CIT(A) deciding against quantum assessment as well penalty. The grievance of the assessee before the Tribunal against quantum appeal was that ld. CIT(A) has remanded the matter back to the file of ld. AO by exercising powers u/s 251(1)(a) of the 1961 Act, without adjudicating legal grounds raised by the assessee. The Tribunal was pleased to quash assessment order and ld. CIT(A) orders in quantum , vide its orders dated 15^th May, 2026 in ITA No. 470/Del/2026 , wherein the Tribunal quashed the assessment order in quantum and the appellate order passed by ld. CIT(A), by holding as under:

It was submitted by ld. Counsel for the assessee that when quantum assessment itself was quashed, the penalty imposed by the AO u/s 271(1)(c) of the 1961 Act, cannot be sustained and is liable to be quashed.

We have considered rival contentions and perused the material on record. The brief background of the case and contentions raised by both the parties are recorded in preceding para’s of this order,and are not repeated. We agree with the contentions of ld. Counsel for the assessee that when appeal against quantum assessment framed by the AO and its adjudication by ld. CIT(A), is allowed by the Tribunal by quashing the assessment order as well the appellate order passed by ld. CIT(A) vide orders dated 15.05.2026 in ITA no. 470/Del/2026, penalty order passed by the AO levying penalty u/s 271(1)(c) and the adjudication order passed by ld. CIT(A), cannot stand and are liable to be quashed. Thus, we have no hesitation in quashing the penalty order passed by the AO as well appellate order passed by ld. CIT(A) wrt penalty levied against the assessee u/s 271(1)(c) of the 1961 Act. The appeal of the assessee is allowed. We order accordingly.

In the result, the appeal filed by the assessee is allowed.