MAHAJAN LEASING 7 CREDIT P LTD,GHAZIABAD V. INCOME TAX OFFICER, WARD-16(2), DELHI

ITA 7079/DEL/2025

AI Insights

The case involves Mahajan Leasing & Credit P. Ltd., the appellant, contesting a penalty imposed by the Income Tax Officer under section 271B of the Income Tax Act, 1961, for the Assessment Year 2010-11. The penalty was initially based on an assessment order dated 18.03.2013, which was later annulled by the Tribunal in a previous appeal. The appellant argued that the penalty, based on the annulled assessment, was no longer valid. Furthermore, the appellant contended that the penalty was imposed without proper adherence to the principles of natural justice, as the penalty order was issued before the appellant could respond to the show cause notice. The Tribunal agreed with the appellant, noting the procedural improprieties and the annulment of the underlying assessment order.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841739 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 05-11-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR
• Assessee Lawyers: ANKIT GUPTA
• Keywords: Condonation of delay; Principle of natural justice
• Section: 144

Judgement Text

"आयकर अपीलीय अधिकरण धिल्ली पीठ “सी”, धिल्ली श्री धिकास अिस्थी, न्याधयक सिस्य एिं श्री ब्रजेश क ुमार स िंह, लेखाकार सिस्य क े समक्ष IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER& SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER आअसं.7079/धिल्ली/2025(नि.व. 2010-11) ITA No.7079/DEL/2025 (A.Y.2010-11) Mahajan Leasing & Credit P. Ltd., C/o Shri Braham Prakash Sharma, 10/28, Raj Nagar, Ghaziabad, Uttar Pradesh 201002 PAN: AAACM-8795-K ...... अपीलार्थी/Appellant बिाम Vs. Income Tax Officer, Ward-16(2), R. No. 213, 2nd Floor, CR Building, IP Estate, New Delhi 110002 .....प्रनिवादी/Respondent अपीलार्थी द्वारा/ Appellant by: Shri Ankit Gupta, Advocate प्रधििािीद्वारा/Respondent by: Shri Manoj Kumar, SR. DR सुिवाई की निथर्थ/ Date of hearing : 25/02/2026 घोषणा की निथर्थ/ Date of pronouncement : 25/02/2026 आदेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 04.09.2025 confirming levy of penalty u/s.271B of the Income Tax Act,1961(hereinafter referred to as ‘the Act’), for Assessment Year 2010-11. 2. Shri Ankit Gupta, appearing on behalf of the assessee submits that the original assessment was made in the case of assessee for AY 2010-11 u/s.144 of the Act vide order dated 18.03.2013. Against the said assessment order, the assessee filed appeal before the CIT(A). The CIT(A) decided appeal of the assessee vide order Printed from counselvise.com 2 ITA No.7090/DEL/2025 (A.Y.2010-11) dated 27.06.2014. The assessee further filed appeal against the order of CIT(A) before the Tribunal. The Tribunal vide order dated 11.07.2018 remanded the matter back to the Assessing Officer (AO) for denovo assessment. Thus, the assessment order dated 18.03.2013 passed u/s. 144 of the Act was annulled. The present penalty proceedings u/s.271B of the Act emanates from the assessment order dated 18.03.2013 which now stands quashed. Therefore, the penalty levied by the AO u/s.271B of the Act vide order dated 12.09.2013 does not survive. The ld. Counsel further pointed that even the penalty order u/s. 271B of the Act has been passed in violation of principles of natural justice. Referring to the show cause notice dated 06.09.2013 at page 36 of the paper book, the ld. Counsel submits that the AO vide aforesaid show cause notice had allowed the assessee to file reply by 16.09.2013, but the penalty order has been passed on 12.09.2013 itself. The assessee vide reply dated 16.09.2013 had furnished audited financials for the period ending on 31.03.2010. The assessee had dispatched reply dated 16.09.2013 vide registered post on 17.09.2013. By the time the assessee could furnish reply, penalty order u/s.271B of the Act was already passed by the AO. The assessee filed appeal against the penalty order dated 12.09.2013, however, the CIT(A) without appreciating the facts dismissed appeal of the assessee on the ground of limitation. The assessee filed an application for condonation of delay in filing of appeal but the same did not find favour with the CIT(A). 3. Per contra, Shri Manoj Kumar representing the department submitted that the appeal was filed by the assessee before the CIT(A) after an inordinate delay of more than 2000 days. Hence, appeal of the assessee was dismissed in limine. 4. Both sides heard, orders of the authorities below examined. The CIT(A) vide impugned order has dismissed appeal of assessee in limine on the ground of Printed from counselvise.com 3 ITA No.7090/DEL/2025 (A.Y.2010-11) limitation. Dehors, the fact that appeal of the assessee was dismissed by the First Appellate Authority on the ground of limitation, the penalty order u/s.271B of the Act is not sustainable as the assessment order pursuant to which penalty u/s.271B of the Act was levied does not survive. If the substratum for levy of penalty is eroded, the penalty proceedings would fall. Even, otherwise penalty u/s.271B of the Act is levied on account of failure on part of the assessee to get the accounts audited as mandated u/s.44AB of the Act. The assessee has placed on record Auditors Report dated 25.08.2010 and the copy of audited accounts as on 31.03.2010. Hence, the penalty levied u/s.271B of the Act is unsustainable. 5. In the result, appeal of the assessee is allowed. Order pronounced in the open court on Wednesday the 25th day of February, 2026. Sd/- Sd/- (BRAJESH KUMAR SINGH) (VIKAS AWASTHY) लेखाकार सदस्य/ACCOUNTANT MEMBER न्यानयक सदस्य/JUDICIAL MEMBER धिल्ली / Delhi, ददिांक/Dated 27/02/2026 NV/- प्रतिलिपि अग्रेपििCopy of the Order forwarded to : 1. अपीलार्थी/The Appellant , 2. प्रनिवादी/ The Respondent. 3. The PCIT 4. ववभागीय प्रनिनिथि, आय.अपी.अथि., सिल्ली /DR, ITAT, धिल्ली 5. गार्ड फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar) ITAT, DELHI Printed from counselvise.com "