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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: SHRI SANJAY GARG, HON’BLE & DR. MANISH BORAD, HON’BLE
O R D E R
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal has been preferred by the assessee against the order of National Faceless Appeal Centre, (hereinafter referred to as “the ld. CIT(A)”), passed u/s 250 of the Income Tax Act, 1961 (hereinafter ‘the Act’) dated 25/01/2023, for Assessment Year 2017-18.
The only issue for our consideration is whether the ld. CIT(A) was justified in confirming the penalty of Rs.2,21,750/- levied u/s 270A of the Act.
Facts in brief are that the assessee is a private limited company. Income of Rs.2,40,850/- was declared in the return filed for Assessment Year 2017-18 on 31/12/2018. Assessment proceedings u/s Assessment Year: 2017-18 Pran Beverages (India) Pvt. Ltd. 2 143(3) of the Act were completed on 19/12/2019, assessing total income at Rs.16,76,124/- after making additions of Rs.14,35,184/-. The said addition included Rs.5,79,900/- on account of disallowance of employees’ contribution towards PF & ESI u/s 36(1)(va) r.w.s. 2(24)(x) of the Act and disallowance of expenditure u/s 37 of the Act on account of interest on late payment of service tax and excise duty. The proceedings u/s 270A of the Act was carried out and it was contended by the assessee that the addition is only in the nature of under reporting of income and not mis-reporting of income. Prayer was made to drop the penalty proceedings u/s 270A r.w.s. 274(1) of the Act. However, the ld. Assessing Officer imposed the penalty of Rs.2,21,750/- u/s 270A of the Act. 3.1. Aggrieved, the assessee preferred appeal before the ld. CIT(A) but on account of non-appearance, appeal of the assessee was dismissed ex-parte by the ld. CIT(A) following the judgment of the Hon’ble Supreme Court in the case of CIT vs. B.N. Bhattacharjee and Another, 118 ITR 461 (SC) and the decision of the Co-ordinate Bench of ITAT Delhi in the case of CIT vs. Multiplan India (P) Ltd. (1991) 38 ITD 320.
Aggrieved, the assessee is now in appeal before this Tribunal, raising the following grounds:- “
1. FOR THAT the Ld. Commissioner of Income Tax (Appeals)-NFAC failed to appreciate that none of the conditions precedent required to be satisfied for the assumption of jurisdiction u/s. 274 read with s. 270A of the Income Tax Act, 1961 existed and/or have been complied with and/or fulfilled in the instant case by the Ld. Assistant Commissioner of Income Tax, Circle 1 (2), Kolkata and his specious action in upholding the impugned order dated 27-08-2021 imposing Assessment Year: 2017-18 Pran Beverages (India) Pvt. Ltd. 3 penalty in the sum of Rs. 2,21,750/- in pursuance to notice dated 19-12-2019 is therefore ab initio void, ultra vires, and ex-facie null in law.
2. FOR THAT the Ld. Commissioner of Income Tax (Appeals)-NFAC did not consider that the impugned notice dated 19-12-2019 issued u/s. 274 read with s. 270A of the Income Tax Act, 1961 issued by the Ld. Assistant Commissioner of Income Tax, Circle 1(2), Kolkata failed to classify the exact nature of default for invoking the mischief thereof and the impugned action in that respect is altogether arbitrary, unwarranted, and perverse.
3. FOR THAT the Ld. Commissioner of Income Tax (Appeals)-NFAC acted unlawfully in upholding the impugned order imposing penalty of Rs. 2,21,7501- by the Ld. Assistant Commissioner of Income Tax, Circle 1(2), Kolkata solely and exclusively relying upon the findings in the quantum proceedings by simply adopting the principle of res judicata without adducing on record any independent reasons in support therefor and such adverse finding de hors any compelling basis is altogether unfounded, unjustified, and untenable in law.
4. FOR THAT the Ld. Commissioner of Income Tax (Appeals)-NFAC was wholly in error in upholding the impugned order imposing penalty of Rs. 2,21,750/- passed by the Ld. Assistant Commissioner of Income Tax, Circle 1(2), Kolkata without considering the facts of the present case in light of the provisions of s. 270A of the Income Tax Act. 1961, and thereby grievously violating the provisions to that extent and the specious findings reached on such extraneous considerations not germane to the issue is totally illegal, illegitimate, and infirm in law.”
The ld. Counsel for the assessee referring to the detailed paper book submitted that notice u/s 274 r.w.s. 270A of the Act is bad in law because the ld. Assessing Officer failed to failed to classify the exact nature of default for invoking the provisions of Section 270A of the Act and, therefore, the impugned action in this respect is altogether arbitrary, unwarranted and perverse.
The ld. D/R on the other hand, submitted that the assessee did not appear before the ld. CIT(A) even when sufficient opportunity was granted and, therefore, assessee does not deserve any relief at this stage. Assessment Year: 2017-18 Pran Beverages (India) Pvt. Ltd. 4 7. We have heard rival contentions and perused the material placed before us. 8. The assessee has raised the legal grounds for the first time before this Tribunal challenging the validity of the proceedings carried out u/s 270A of the Act on the ground that notice u/s 274 of the Act is bad in law as the exact nature of default as to whether the penalty proceedings are being initiated for under-reporting of income or mis- reporting of income has been levelled against the assessee. We observe that before the ld. CIT(A) assessee failed to appear on five occasions and also no legal ground was raised. We also observe that the assessment in the case of assessee was framed u/s 143(3) on 19/12/2019 and while concluding the assessment proceedings, the ld. Assessing Officer observed in the assessment order that penalty proceedings u/s 270A of the Act for under-reporting of income and mis-reporting of income in initiated separately on points of addition and a notice was issued on 11/06/2020 u/s 274(1) of the Act. In this notice, ld. Assessing Officer has observed that during the course of assessment proceedings for Assessment Year 2017-18, it appears that there is under-reporting and mis-reporting of income. Thereafter, another showcause notice was issued on 06/05/2021, since Faceless Penalty Scheme was launched on 12/01/2021. But in the said notice it is not mentioned whether the proceedings are for under-reporting or mis-reporting of income. Based on this fact, the impugned legal ground has been raised before us and the same is admitted.