Penalty u/s 271(1)(c) invalid if initiated under wrong explanation/limb and levied under another, violating natural justice; no penalty on normal additions when tax under MAT pre-A.Y. 2017.

ORDER

PER MANJUNATHA G., A.M:

The appeals filed by the assessee are directed against the separate, but identical orders of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (for short “Ld.CIT(A)”) all dated 26.08.2025, pertaining to the assessment years 2010-11, 2013-14 & 2015-16, respectively. Since common issues are involved in these appeals, the same were heard together and are being disposed of by this single consolidated order for the sake of convenience and brevity.

2. First, we take up appeal in ITA No. 1801/HYD/2025 for A.Y.2010-11. The grounds raised by the assessee in this appeal are re-produced as under:

“1. That on the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi erred in not quashing the impugned penalty order dt. 18-06-2021 as bad-in-law, since it was based on an invalid show-cause notice issued u/s 271(1)(c) of the Act r.w. Explanation 5 of the Act dt.29-12-2017.

2. That the Learned Commissioner of Income Tax (Appeals) failed to appreciate the law that if the initiation of penalty proceedings is void-ab-initio due to the non-recording of proper satisfaction, any further proceedings would also be bad-in-law.

3. That the Learned Commissioner of Income Tax (Appeals) failed to appreciate that since the addition of Rs.5,00,000/- towards unexplained investment u/s 68 of the Act in the appellant's hands is bad-in-law, the consequent penalty levied based on the said addition is also bad-in-law and liable to be deleted.

4. That the Learned Commissioner of Income Tax (Appeals) failed to appreciate that since the addition of Rs.2,61,000/- towards unexplained investment u/s 69 of the Act for the AY 2010-11 is bad-in-law, the consequent penalty levied based on the said addition is also bad-in-law and liable to be deleted.

5. That the Learned Commissioner of Income Tax (Appeals) erred in not appreciating the legal position that when no addition can be made in the absence of incriminating evidence for a concluded assessment year, the question of imposing penalty based on such addition does not raise.

6. That the Learned Commissioner of Income Tax (Appeals) failed to appreciate that income offered to avoid protracted litigation cannot fall within the ambit of concealment of income for the purpose of levy a penalty.

7. That the impugned penalty order dated 18-06-2021 is null and void, as it was passed in violation of CBDT circular no. 19/2019 dated 14-08-2019, which mandates the quoting of a computer generated DIN in the body of the Penalty Order.

8. The appellant craves leave to add/alter/ modify the grounds of appeal as may be required for proper adjudication of the case.”

3. The brief facts of the case are that, the assessee company is engaged in the granite business filed its return of income for the A.Y. 2010-11 admitting an income of Rs.67,01,120/-, after claiming deduction of Rs.2,95,21,133/- under section 10B of Income Tax Act, 1961 (for short “the Act”). A search and seizure operation under section 132 of the Act was conducted in the case of the assessee on 29.12.2015. Consequent to the search, a notice under section 153A of the Act has been issued, for which, the assessee has filed its return of income on 15.04.2017 declarin