PRABHAT KUMAR RASTOGI ,MEERUT V. ITO WARD- 1(2)(1), MEERUT

ITA 3037/DEL/2025

AI Insights

The case involves an appeal by Prabhat Kumar Rastogi against the penalty imposed by the Income Tax Officer under section 271B of the Income-tax Act, 1961, for failure to furnish an audit report in the stipulated time as required under section 44AB. The penalty was based on an assessment order which was later set aside. The Tribunal noted that the subsequent assessment order accepted the assessee's return, leading to the conclusion that the penalty was not justifiable.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 786379 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Appeal Filed On: 06-05-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH
• Assessee Lawyers: SANJAY KUMAR
• Keywords: Set aside; Business income
• Section: 144; 143(3); 68

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C”, DELHI BEFORE SH. M. BALAGANESH, ACCOUNTANT MEMBER AND SH. SUDHIR KUMAR, JUDICIAL MEMBER ITA No.3037/DEL/2025 Assessment Year: 2017-18 Prabhat Kumar Rastogi 76,Holi Mohalla, Near Saraffa, Bazar Meerut City Uttar Pradesh250002 PAN No. ACFPR6257D Vs. Income Tax Officer Ward1(2) (1) Meerut (APPELLANT) (RESPONDENT) Appellant by Sh. Sanjay Kumar, CA Respondent by Sh. Om Prakash, Sr. DR Date of hearing: 11/09/2025 Date of Pronouncement: 28/10/2025 ORDER PER SUDHIR KUMAR, JUDICIAL MEMBER: This appeal by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [hereinafter referred to as “NFAC”] vide order dated 11.04.2025 pertaining to A.Y. 2017-18 arising out the penalty order dated 22.01.2022 u/s.271 B of the Income-tax Act, 1961, (in short ‘the Act’). 2. The assessee has raised the following grounds in appeal: Printed from counselvise.com 2 1.That on the fact of the case and under the law, Honourable CIT( Appeal) has wrongly confirmed penalty of Rs. 1,17,258/- u/s 271 B without judicially considering reply of the assessee apprising that assessment order passed u/s 144 r.w.s 143(3) is set aside for fresh adjudication. Penalty u/s 271B is initiated on the basis of order passed u/s 144 which is no more effective. Therefore penalty u/s 271B is wrongly confirmed by Honourable CIT(Appeal) and needs to be deleted. 2. 1That on the fact of the case and under the law, Honourable CIT( Appeal) has mentioned that credit entries in bank accounts amounting to Rs. 2,34,51,584/- are not explained and treated as turnover of the assessee, whereas the assessee has already clarified all credit entries in the bank account in reply to quantum appeal against order u/s 144. As a result , Honourable CIT( Appeal) failed to take cognizance of proceedings of appeal filed against order u/s 144. In nut shell we shall like to pray addition of turnover of Rs. 2,34,51,584/- is no more in existence as order u/s 144 is set aside, Honourable CIT( Appeal) is unjustified in confirming penalty u/s 271B. 3. The brief facts of the case are that the return of income filed by the assessee for A.Y. 2017-18 declaring total income of Rs. 3,19,040/-. The case of the assessee was selected Printed from counselvise.com 3 under CASS for scrutiny to verify abnormal increase in cash deposit during the demonization period as compared to pre- demonization period. During the course of proceedings, it was noticed that the assessee turn over for the during the A.Y. 2017-18 were to the tune of Rs, 2,34,51,584/- including cash deposits of Rs. 57,60,000/-. The Assessing Officer made the addition of Rs.61,83,893/- as business income computed by applying a net profit rate of 28% on the total credits of Rs. 2,34,51,584/-base on the profit percentage disclosed by the assessee in the return and also made the addition of Rs. 19,00,000/- under section 69A and 68 of the Act. Aggrieved the order of the Assessing Officer the assessee filed the appeal before the Ld. CIT(A) who vide his order dated27-03-2025 set aside the order and matter sent back to AO for fresh assessment. The assessing officer initiated the penalty proceedings on the basis of the assessment. According to AO the assessee has Printed from counselvise.com 4 failed to furnish the audit report in the stipulated time as required u/s 44AB of the Act. The assessing officer levied the penalty of Rs. 1,17,258/- against the assessee. Aggrieved the order of the Assessing Officer the assessee preferred the appeal before the Ld. NFAC who vide his order dated 11-04-2025 dismissed the appeal against which the assessee is in appeal before us. The Ld. NFAC observed in the order as under: 7.2 I have perused the facts of the case as well as the submission of the appellant and find that the appellant has failed to substantiate the credits entries in bank accounts amounting to RS. 2,34,51,584/. During the course of the proceedings the appellant has been granted more than sufficient opportunities but so far, no explanation has been submitted as to why the credits in the bank account don’t come under the total turnover of the appellant for the year under consideration. The appellant has also failed to submit any clarification as to how such huge sums were received in the bank account if the Printed from counselvise.com 5 same aren’t business receipts. In the absence of the same, there is no other way but consider the same as total turnover and it can be inferred that the business turnover of the assessee has certainly exceeded the turnover limit for which audit report is required as mandated under section 44AB of the I.T. Act. In view of the above discussion and also on the fact that the appellant failed to give the details of the turnover of the business & the credit entries appearing in the bank account, the grounds of this appeal are not sustainable. Accordingly, the Penalty levied by the AO is hereby upheld and these grounds of appeal are dismissed. 5. Ld. AR for the assessee submitted that Assessing officer wrongly considered the credit entries in two banks accounts amounting to RS. 2,34,51,584/- as turnover of the assessee. He also submitted that the quantum appeal filed by the assessee was allowed by the Ld. CIT(A) and ld. Assessing Officer based on the submission made by the assessee accepted the return of Income of the assessee as filed earlier. He further submitted that the assessment Printed from counselvise.com 6 order passed dated 30-12-2019 has been set aside than penalty cannot be levied. 6. The Ld. Sr. DR has relied the order of the lower authorities. We have heard the parties and gone through the material available on record. In the present case we found, that the assessment order dated 30-12-2019, on which basis penalty was levied has been set-aside and the return of income filed by the assessee has been accepted by the AO after considering the documents submitted by the assessee. The assessee has filed the copy of the order of the assessment dated 03-09-2025(P.B. page 32-36) which was passed in the compliance of the order of the Ld. CIT(A) dated 27-03-2025, to show that the addition has been deleted by the AO. Because the assessment order has been set-aside then penalty cannot be levied against the assessee. Therefore, the penalty levied by Assessing Officer against the assessee is deleted. Printed from counselvise.com 7 7. In the result the appeal of the assessee is allowed. Order pronounced in the open court on 28.10.2025. Sd/- Sd/- (M. BALAGANESH) (SUDHIR KUMAR) ACCOUNTANT MEMBER (JUDICIAL MEMBER) Date: 28.10.2025 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) ` 5. DR: ITAT ASSISTANT REGISTRAR ITAT DELHI Printed from counselvise.com 8 Printed from counselvise.com "