RAJU CHANDRASEKAR,ODUVANPATTI, TIRUPPATTUR V. INCOMETAX OFFICER, WARD-1, KARAIKUDI, SEKKALAI ROAD, KARAIKUDI

ITA 3107/CHNY/2025

AI Insights

The case involves an appeal by Shri Raju Chandrasekar against the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961, following a quantum assessment for the assessment year 2015-16. The Income Tax Appellate Tribunal in Chennai set aside the quantum assessment due to procedural errors in the issuance of the notice under section 148 of the Act. Consequently, the penalty, which was a direct result of the quantum assessment, was also quashed. The tribunal noted that if the Supreme Court were to reverse the High Court's decision on the procedural validity of the notice, the penalty could be revived for adjudication on its merits.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 831783 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 01-11-2025
• Other Referred Cases: TVS Credit Service Ltd. vs. DCIT, Hexaware Technologies Ltd. vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.KAVITHA
• Assessee Lawyers: T.VASUDEVAN
• Keywords: Set aside
• Section: 148

Judgement Text

"आयकर अपीलȣय अͬधकरण, ‘ए’ Ûयायपीठ, चेÛनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI Įी जॉज[ जॉज[ क े, उपाÚय¢ एवं सुĮी पɮमावती एस, लेखा सदèय क े सम¢ BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENTAND MS PADMAVATHY S, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 3107/CHNY/2025 िनधाᭅरण वषᭅ/Assessment Year: 2015-16 Shri Raju Chandrasekar, No.96, Oduvanpatti, Melapatti (Post), Tiruppattur (Taluk), Sivagangai District, Tirupathur – 630 502. PAN: AGPPC 1616D Vs. The Income Tax Officer, Ward 1, Karaikudi (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri T. Vasudevan, Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Ms. R. Kavitha, Addl.CIT सुनवाई कᳱ तारीख/Date of Hearing : 20.01.2026 घोषणा कᳱ तारीख/Date of Pronouncement : 22.01.2026 आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 08.07.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The order of the CIT(A)-NFAC arises out of the order of the AO Printed from counselvise.com ITA No.3107/Chny/2025 :- 2 -: imposing penalty u/s.271(1)(c) of the Act. The relevant Assessment Year is 2015-16. 2. The Ld.AR submitted that as against the quantum assessment, the Tribunal in ITA No.3000/CHNY/2025 had set aside the reassessment order for the reason that the notice u/s.148 of the Act was issued by the Jurisdictional Assessing Officer [JAO] instead of Faceless Assessing Officer [FAO]. The Tribunal followed the judgment of the Hon’ble Jurisdictional High Court in the case of TVS Credit Service Ltd., vs. DCIT in WP No.22402 of 2024 (judgment dated 24.06.2025). The copy of the Tribunal order in ITA No.3000/CHNY/2025 dated 17.12.2025 has been placed on record. The Ld.AR submitted that in light of the quantum assessment order being set aside, the penalty order u/s.271(1)(c) of the Act which arise out of the quantum assessment needs to be quashed. 3. The Ld.DR supported the order of the AO and the First Appellate Authority. 4. We have heard rival submissions and perused the material on record. The present appeal emanates from an order imposing Printed from counselvise.com ITA No.3107/Chny/2025 :- 3 -: penalty u/s.271(1)(c) of the Act. It is an admitted fact that quantum assessment has been set aside by the Tribunal since notice u/s.148 of the Act was issued by the JAO instead of FAO. Therefore, the penalty order arising from the quantum assessment does not have foundational basis and hence, the same is set aside. However, in the quantum assessment, the Tribunal had kept open the rights of the contention of the Revenue to revive the quantum assessment if the Revenue succeeds before the Hon’ble Apex Court. The relevant portion of the order of the Tribunal in the quantum assessment which gives liberty to the Revenue to revive the appeal reads as follows:- “8. In light of the above, we set aside the impugned notice issued under section 148 of the Act and consequential order passed pursuant thereto. However, in the light of the Para No.8 of the decision of the jurisdictional High Court in the case of TVS Credit Services Ltd., supra, we also keep open of rights and contentions of parties including liberty to approach this bench, in case, the Revenue succeeds before the Apex Court for revival of this appeal.” 5. In the event, the Hon’ble Supreme Court reverses the judgment of the Hon’ble Jurisdictional High Court in the case of Hexaware Technologies Ltd., vs. ACIT, (supra) the quantum assessment gets revived. Therefore, the penalty imposed u/s.271(1)(c) of the Act (the appeal filed by the assessee before the ITAT) also needs to be revived for adjudication on merits. Printed from counselvise.com ITA No.3107/Chny/2025 :- 4 -: With these observations, the appeal of the assessee is disposed of. 6. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 22nd January, 2026 at Chennai. Sd/- Sd/- (पɮमावती एस) (PADMAVATHY S) लेखा सदèय/ACCOUNTANT MEMBER (जॉज[ जॉज[ क े) (GEORGE GEORGE K) उपाÚय¢ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 22nd January, 2026 RSR आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy to: 1. अपीलाथȸ/Appellant 2. Ĥ×यथȸ/Respondent 3. आयकर आयुÈत /CIT, Madurai 4. ͪवभागीय ĤǓतǓनͬध/DR 5. गाड[ फाईल/GF. Printed from counselvise.com "