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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI V. DURGA RAO, HON’BLE & SHRI G. MANJUNATHA, HON’BLE
आदेश /O R D E R
PER G. MANJUNATHA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 28.06.2022 and pertains to assessment year 2017-18.
At the outset, we find that there is a delay of 18 days in appeal filed by the assessee. During the course of hearing,
:-2-: ITA. No: 779/Chny/2022 when defect was brought to the notice of the learned AR present for the assessee, he has submitted that delay in filing of appeal is mainly due to lockdown imposed by the Govt. on account of spread of Covid-19 infections and in view of the Hon’ble Supreme Court suomotu Writ Petition No.3 of 2020, if the period of delay is covered within the period specified in the order of the Apex Court, then same needs to be condoned in view of specific problem faced by the public on account of Covid-19 pandemic.
The learned DR, on the other hand, fairly agreed that delay may be condoned in the interest of justice.
Having heard both sides and considered reasons given by the learned AR, we find that the Hon’ble Supreme Court in suomotu Writ Petition No.3 of 2020, has extended limitation applicable to all proceedings in respect of Courts and Tribunals across the country on account of spread of Covid-19 infections w.e.f. 15.03.2020, till further orders and said general exemption has been extended from time to time. We further noted that delay noticed by the Registry pertains to the period of general exemption provided by the Hon'ble Supreme Court
:-3-: ITA. No: 779/Chny/2022 extending limitation period applicable for all proceedings before Courts and Tribunals and thus, considering facts and circumstances of the case and also in the interest of natural justice, we condone delay in filing appeal filed by the assessee.
The assessee has raised the following grounds of appeal: 1 . It is submitted that the assessment is completed accepting the computation filed by the assessee in the course of assessment proceedings. Though the assessment was completed under section 144 the assesse had appeared before the assessing authority and details were submitted which were accepted without any variation. The concept of misreporting was for the first time introduced in the order levying penalty and not at any time earlier. The relevant observation in the order levying penalty is as under The reply of the assessee has been considered and not found tenable for the following reason: However, assessee case fall under "under reporting of income" in consequence of misreporting and hence immunity u/s 270AA is not applicable in this case. As assessee failed to record any receipt in books of account having a bearing on total income thus this is a· case of misreporting of income. Under Section 270A(9)) of Income Tax Act a person shall be considered to have under reported in consequence of misreporting his income if :'failed to record any receipt in books of account having a bearing on total income " This provision of Income Tax Act, 1961 is applicable in the case of assessee. Section 270A(8) states that where under reported income is in consequence of any miss reporting thereof by any person the penalty referred to in subsection (1) shall be equal to 200% of the amount of tax payable on under reported income. Hence, penalty to be imposed is @200% of tax evaded-------.” 1.1 It is submitted that penalty for misreporting has been levied without putting the assessee to notice that the
:-4-: ITA. No: 779/Chny/2022 proceedings have been initiated for misreporting . In all the notices preceding the levy of penalty only underreporting is stated and not misreporting. Kind attention is invited to decision in SCHEIDER ELECTRIC SOUTH EAST ASIA PRIVATE LIMITED V AAST C.I.T( 2022) 443 ITR 186( DELHI) wherein in similar circumstances penalty levied has been annulled. 1.2 I is submitted that Circular number 3/2017 dated 20/01/2017 states that provisions of section 270A is introduced for rationalizing of provisions and levy of penalty is not mandatory. 2. It is submitted that the findings in the assessment order is as under " 3. Determination of Total Income: 3.1 In response to the notice issued u/s.142(1 ), Shri.Shaji Poulose, FCA appeared on behalf of the assessee and stated that, the firm has since closed its business as it had incurred heavy loss. The loss was attributed to the competitive market conditions and managerial issues as all the partners were resident in Kerala. A copy of the profit and loss account of the firm was filed during the proceedings. The profit admitted is assessed as the income of the firm for the assessment year 2017-18. 3.1 In view of the discussions above, the total income of M/s. Okasi Ceramics is determined as below: Income of the firm from business : Rs.10,15,730/------ It is submitted that there is no finding in the assessment order that there is failure to record any receipts in books . In the assessment order the profit as per profit and loss account has been accepted. There is also no fresh material in the penalty order substantiating the finding that there is failure to record any receipt in books of account. 4. It is submitted that without prejudice to the above grounds other grounds may be allowed at the time of hearing.”
The brief facts of the case, are that the appellant firm did not filed its return of income u/s. 139 of the Income-tax Act,
:-5-: ITA. No: 779/Chny/2022 1961 (hereinafter referred to as “the Act”) for the assessment year 2017-18. The notice u/s. 142(1) of the Act, dated 12.03.2018 was issued and duly served on the assessee firm and required the assessee to provide a true and correct return of income in respect of which it is assessable under Income- tax Act, 1961. During the previous year relevant to assessment year 2017-18, the assessee firm did not file its return of income for the assessment year 2017-18, within the time provided in the notice issued u/s. 142(1) of the Act, nor within the time allowed u/s. 139(4) of the Act. Therefore, the AO has issued a show cause notice u/s. 144 of the Act and proposed to pass at best judgment of assessment on the basis of material available on record. Subsequently, the assessee through its Authorized Representative Shri. Shaji Poulose, CA, filed a copy of the profit and loss account and admitted income from business at Rs. 10,15,730/-. The assessment has been completed u/s. 144 of the Act on 16.12.2019 and determined total income at Rs. 10,15,730/- as returned by the assessee.
The AO has initiated penalty proceedings u/s. 270A of the Act for ‘under reporting of income’ and thus, a show cause notice dated 13.05.2021 was issued. In response to notice,
:-6-: ITA. No: 779/Chny/2022 the assessee submitted that firm has paid tax within 30 days and is claiming immunity u/s. 270AA of the Act. The AO did not dispose off application filed by the assessee u/s. 270AA of the Act and preceded with levy of penalty u/s. 270A of the Act, on the ground that the assessee has under reported its income and consequence of misreporting and thus, the assessee is not entitled for immunity as provided u/s. 270AA of the Act and thus, levied penalty of 200% of the tax sought to be evaded which worked out to Rs. 6,09,438/-. The assessee carried the matter in appeal before the first appellant authority, but could not succeed. The Ld. CIT(A), for the reasons stated in their appellant order dated 28.06.2022, dismissed appeal filed by the assessee and upheld penalty levied by the AO. Aggrieved by the CIT(A) order, the assessee is in appeal before us.
The Ld. Counsel for the assessee, referring to application filed by the assessee in Form no. 68 as required u/s. 270AA(2) of the Act, dated 28.02.2020 submitted that although the assessee has filed an application seeking immunity from levy of penalty u/s. 270AA of the Act, but the AO did not considered application filed by the assessee before levying
:-7-: ITA. No: 779/Chny/2022 penalty u/s. 270A of the Act and thus, the whole penalty proceedings becomes vitiate and liable to be quashed.
The ld. DR, on the other hand referring the order of the CIT(A) submitted that, the CIT(A) has dealt with issue of application filed by the assessee u/s. 270AA of the Act and held that the assessee is not entitled for immunity, because the case of the assessee comes under 270A(9)(e) of the Act. Therefore, there is no merit in arguments of the assessee that penalty order passed by the AO is illegal and void-ab-initio.
We have heard both the parties, perused materials available on record and gone through orders of the authorities below. There is no dispute with regard to the fact that the assessee did not filed its return of income for the assessment year 2017-18 in response to 142(1) notice or within due date prescribed u/s. 139(4) of the Act, even though, the assessee is having taxable income. The AO has completed assessment proceedings and determined total income of the assessee at Rs. 10,15,730/- and has levied penalty u/s. 270A of the Act, for under reporting of income in consequence of misreporting of income in terms of provisions of section 270A(9)(e) of the
:-8-: ITA. No: 779/Chny/2022 Act. Grievance of the assessee before us is that, the assessee filed an application in Form no. 68 and sought immunity from levy of penalty because the assessee has satisfied conditions prescribed u/s. 270AA of the Act, but the AO without disposing off application filed by the assessee in Form no. 68 has completed penalty proceedings and levied penalty u/s. 270A of the Act.
We find that, when the assessee has filed an application in Form no. 68, seeking immunity from levy of penalty in terms of section 270AA of the Act, as per sub section 4 of the 270AA of the Act, the AO shall pass order accepting or rejecting said application after giving an opportunity of hearing to the assessee. In this case, the AO did not pass an order accepting or rejecting application filed by the assessee as required u/s. 270AA(4) of the Act. Therefore, we are of the considered view that on this ground itself, we can conclude that the penalty order passed by the AO u/s. 270A of the Act is not maintainable. However, considering facts and circumstances of the case and also taking into totality of facts of the present case, we deem it appropriate to set aside the order passed by the Ld. CIT(A) and restore the issue of levy of
:-9-: ITA. No: 779/Chny/2022 penalty u/s. 270A of the Act to the file of the AO. Thus, we set aside the issue to the file of the AO and direct the Assessing Officer to deal with the application filed by the assessee in Form no. 68 of the Act by passing a speaking order before levying penalty u/s. 270A of the Act.
In the result, appeal filed by the assessee is treated as allowed for statistical purposes.
Order pronounced in the court on 08th February, 2023 at Chennai. Sd/- Sd/- (वी दुगा� राव) (जी. मंजुनाथ) (V. DURGA RAO) (G. MANJUNATHA) �याियकसद�य/Judicial Member लेखासद�य/Accountant Member चे�ई/Chennai, �दनांक/Dated: 08th February, 2023 JPV आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु� (अपील)/CIT(A) 4. आयकर आयु�/CIT 5. िवभागीय �ितिनिध/DR 6. गाड� फाईल/GF