2025 (7) TMI 236 - AT - Income Tax

Penalty u/s.271D - violation of the provisions of section 269SS - CIT(A) had dismissed the appeal as infructuous and treated as withdrawn based on the assessee s letter withdrawing a separate appeal against penalty u/s 270A HELD THAT - CIT(A) has wrongly dismissed the appeal of the assessee as infructuous and treated as withdrawn. The assessee s letter is for withdrawal of the appeal pertaining to the penalty imposed u/s.270A of the Act since the Hon ble High Court had quashed the reassessment order. The penalty imposed u/s.271D of the Act is in violation of provisions of sec.269SS of the Act and the same is independent from the quantum assessment framed. The assessee s letter is also placed on record for the withdrawal of the appeal and the same pertains to an appeal arising from the penalty imposed u/s.270A of the Act. Appeal is restored to the file of the CIT(A). CIT(A) is directed to dispose of the same on merits. Appeal filed by the assessee is allowed for statistical purposes.

Summary

The Appellate Tribunal (ITAT Cochin) heard an appeal by the assessee against the National Faceless Appeal Centre / CIT(A)'s order dated 16.07.2024, which dismissed the appeal challenging penalty imposition under section 271D of the Income-tax Act, 1961 for violation of section 269SS. The CIT(A) had dismissed the appeal as "infructuous and treated as withdrawn," based on the assessee's letter withdrawing a separate appeal against penalty under section 270A following quashing of reassessment by the Kerala High Court.The ITAT held that the CIT(A) erred in conflating the two appeals. The penalty under section 271D is "independent from the quantum assessment framed" and distinct from the penalty under section 270A. The withdrawal letter pertained solely to the appeal against the section 270A penalty and not the section 271D penalty. Accordingly, the ITAT restored the appeal against the section 271D penalty to the file of the CIT(A) and directed disposal "on merits." The appeal was allowed for statistical purposes.