Pr Commissioner of Income Tax vs Harshad S Mehta through Legal… — Income Tax | Bombay HC (2026)

Pr Commissioner of Income Tax vs Harshad S Mehta through Legal… — Income Tax | Bombay HC (2026)

What the court decided

AI extract

Outcome

Disposed

Issue for consideration

Whether the Hon'ble ITAT was justified in deleting the penalty u/s 271(1)(c) as barred by limitation, given that the quantum appeal was pending before the ITAT, that there is no bar on the AO levying penalty while the appeal is pending, and that calculating the time limit from the date of the Ld. CIT (A) order is not as per law. +1 more

Ratio / Principle

Since the Assessing Officer had, by order dated 30th March 2022 for the same assessment year under Section 271(1)(c) of the Income Tax Act, 1961, dropped the penalty proceedings, adjudication of the present appeal was not required, and the Court accordingly disposed of the appeal without deciding the substantial questions of law.

Detailed headnote1 paragraphs

Income Tax Appeal No. 148 of 2024 (High Court of Judicature at Bombay, Ordinary Original Civil Jurisdiction; G. S. Kulkarni & Aarti Sathe, JJ.; decided 27 March 2026). The Principal Commissioner of Income Tax appealed under Section 260A of the Income Tax Act, 1961 against the ITAT order dated 7th September 2021 (assessment year 1990-91), by which the Tribunal deleted the penalty u/s 271(1)(c) as barred by limitation, allowed the assessee's (Harshad S. Mehta, through legal heir Jyoti Mehta) appeal on technical grounds rather than on merits, and dismissed the Revenue's appeal. The Revenue framed two substantial questions of law: (a) whether deletion of the penalty as time-barred was justified while the quantum appeal was pending before the ITAT, the time limit having been reckoned from the CIT(A)'s order; and (b) whether the ITAT could dispose of the penalty on technical grounds where the validity of the showcause notice had not been raised before the AO or CIT(A). At the hearing, counsel for the assessee placed on record an order dated 30th March 2022 for the same assessment year under Section 271(1)(c), whereby the penalty proceedings had been dropped by the Assessing Officer. Holding that, in view of this development, adjudication of the appeal was not required, the Bench disposed of the appeal without answering the substantial questions. No costs or quantum figures appear in the judgment.

14-ITXA-148-24.DOC

JYOTI RAJESH MANE

Digitally signed by JYOTI RAJESH MANE Date: 2026.04.01 10:28:01 +0530

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

INCOME TAX APPEAL NO.148 OF 2024

Pr Commissioner Of Income Tax ...Appellant Versus Harshad S Mehta Through Legal Heir Jyoti Mehta ...Respondents _______

Mr. Suresh Kumar , for Appellant.

Mr. Mahaveer Jain, a/w.Mr. B.M.Biplab i/b. Mahaveer Jain for Respondent

CORAM: G. S. KULKARNI & AARTI SATHE, JJ. DATE: 27 MARCH 2026

P.C.

This appeal is filed under Section 260A of the Income Tax Act, 1961, challenging the order dated 7th September 2021 passed by the Income Tax Appellate Tribunal. The assessment year involved is 1990–91. The Revenue has preferred the present appeal raising the following substantial questions of law:

a. Whether in the facts and circumstances of the case and in law, the Hon'ble ITAT was justified in deleting the penalty u/s 271(1) (C) holding that the same is barred by limitation without appreciating the fact that the appeal on quantum is pending before the Hon'ble ITAT and there is no bar on the AO not to levy penalty while appeal is pending and calculating time limit from the date of Ld. CIT (A) order is not as per law?

b. Whether the Hon'ble ITAT is correct in law, in deciding the penalty imposed by allowing the appeal of assessee on technical grounds rather than on merits and consequently dismissing the appeal of Revenue; without appreciating the fact that the issue of validity neither arose from the order of the first appellate authority nor the issue of validity of showcause notice was challenged either before the AO or before the ld. CIT(A) by the assessee.

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14-ITXA-148-24.DOC

Learned counsel for the assessee has placed on record an order dated 30th March 2022 passed for the same assessment year under Section 271(1)(c) of the Income Tax Act, 1961, whereby the penalty proceedings have been dropped by the Assessing Officer. In view of this development, adjudication of the present appeal is not required. The appeal is accordingly disposed of.

(AARTI SATHE, J.)

(G. S. KULKARNI, J.)

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