ACIT, AGRA V. SAURABH GUPTA, AGRA

ITA 165/AGR/2025

AI Insights

The case involves the Revenue's appeal against the deletion of penalties imposed on the respondent, Saurabh Gupta, for alleged violations of sections 269SS and 269T of the Income-tax Act, 1961, concerning cash transactions. The penalties were initially imposed following additions made during the assessment under sections 143(3) and 153C, based on incriminating material from a search and seizure operation. However, these additions were later deleted by the CIT(Appeals), leading to the deletion of the penalties. The Revenue contended that the penalties were independent of the assessment proceedings, which the Tribunal rejected, citing the precedent set in K.C. Builders vs. ACIT.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 829656 (ITAT-AGRA)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Agra
• Assessment Year: misc
• Appeal Filed On: 27-03-2025
• Other Referred Cases: K.C. Builders vs. ACIT, 135 Taxman 461(SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.P. MAURYA; A
• Assessee Lawyers: ANURAG SINHA
• Keywords: Set aside; Search and seizure; Initiation of penalty proceedings
• Section: 143(3); 132

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No. 165 & 166/Agr/2025 Assessment Year: 2015-16 ACIT, Central Circle, Agra. Vs. Saurabh Gupta, A-185/4, Kamla Nagar, Agra. PAN :AEBPG3309K (Appellant) (Respondent) Assessee by Sh. Anurag Sinha, Advocate Department by Sh. R.P. Maurya, CIT (A)-1/DR Date of hearing 18.12.2025 Date of pronouncement 15.01.2026 ORDER PER : SUNIL KUMAR SINGH, JUDICIAL MEMBER: Both these appeals have been preferred by Revenue against two separate impugned orders each dated 24.01.2025 passed in Appeal No. CIT (A)-IV/KNP/10428 and CIT (A)-IV/KNP/10438 respectively by the Ld. Commissioner of Income-tax (Appeals)-4, Kanpur u/s. 250(6) of the Income- tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2015-16, wherein the ld. CIT(Appeals) has allowed assessee’s first appeals, deleting penalties imposed u/s. 271E and 271D of the Act respectively. 2. Briefly stated, the facts are that the assessment in the case of the respondent-assessee was completed under section 143(3) read with section Printed from counselvise.com ITA No.165 & 166/Agr/2025 2 | P a g e 153C of the Act, pursuant to incriminating material found during search and seizure proceedings dated 26.09.2017 under section 132 conducted in the BNR Group cases. During the assessment proceedings, the Assessing Officer made additions of Rs.1,75,00,000/- on account of cash loans received and Rs.1,19,60,000/- on account of repayment of such loans in cash, treating the same as unexplained money under section 69A of the Act. Consequent thereto, the Assessing Officer initiated penalty proceedings under sections 271D and 271E of the Act for contravention of sections 269SS and 269T, respectively, and imposed penalties of Rs.1,75,00,000/- and Rs.1,19,60,000 vide separate orders each dated 29.05.2023, passed u/s. 271D and 271E of the Act. 3. Aggrieved, the assessee preferred appeals before the learned CIT(Appeals), who allowed the appeals and deleted the penalties on the ground that the underlying quantum additions had already been deleted by the first appellate authority and, therefore, the penalties could not survive. 4. The Revenue has filed the present second appeals on the ground that the quantum additions were deleted on erroneous findings and that penalty proceedings are independent of the assessment proceedings. 5. The principal issue for adjudication under appeal is as to whether the learned CIT(Appeals) erred in deleting the penalties when the quantum additions had already been deleted ?. Printed from counselvise.com ITA No.165 & 166/Agr/2025 3 | P a g e 6. It is undisputed fact that the additions made by the Assessing Officer have been deleted by the first appellate authority, vide order dated 30.11.2023 passed in Appeal No. CIT (A)-IV/KNP/10331/2014-15, which has been confirmed by ITAT vide order dated 13.02.2025 passed in ITA No. 36 & 37/Agr/2024 for A.Yrs. 2015-16 & 2017-18. The impugned penalties were levied solely on the basis of those additions and were thus consequential in nature. Ld. CIT(Appeals) relied K.C. Builders vs. ACIT, 135 Taxman 461(SC), wherein Hon’ble Apex Court held that where the additions in the assessment order, on the basis of which penalty was levied, are deleted, there remains no basis at all for levying the penalty. Since the additions forming the very basis of the penalty proceedings are deleted, the very foundation of the penalties collapse. The penalties cannot thus be sustained independently. The law mandates that the Assessing Officer must record satisfaction regarding the alleged violation of sections 269SS and 269T of the Act in the assessment order itself for valid initiation of penalty proceedings under sections 271D and 271E of the Act. When such an assessment order is annulled or set aside by a higher authority, the satisfaction recorded therein also ceases to exist, rendering the penalty proceedings invalid. In view of the above, we find no infirmity in the orders passed by the learned CIT(Appeals) deleting the impugned penalties. Accordingly, both the appeals filed by the Revenue are dismissed. Printed from counselvise.com ITA No.165 & 166/Agr/2025 4 | P a g e 7. In the result, the appeals of the Revenue, ITA No. 165 & 166/Agr/2025 stand dismissed. Order pronounced in the open court on 15.01.2026. Sd/- Sd/- (S. RIFAUR RAHMAN) (SUNIL KUMAR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 15.01.2026 *aks/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra Printed from counselvise.com "