PRAVESH KUMAR GARG,NEW DELHI vs. ACIT CIRCLE-47(1), NEW DELHI

In the grounds of appeal, the assessee has raised the following grounds:-

That in view of allowing the assessee's petition for this year to be proceeded with by Hon'ble ITSC u/s.245D(1) and 245D(2C), which was pending for final disposal u/s.245D(4) as on the date of passing impugned order u/s.154 by A.O., in view of Sec.245F, the exclusive jurisdiction to pass order uls.154 lied only with Hon'ble ITSC, consequently the impugned order uls.154 passed by A.O. is without jurisdiction.

That under the facts and circumstances penalty initiated u/s.270A cannot be substituted by Sec.271AAC by Sec.292B which has no application and scope to the facts of the case.”

The facts in brief are that return of income for AY 2017-18 was filed on 30.10.2017 declaring income of Rs.82,47,740/- which was duly processed u/s 143(1) of the Act. Thereafter, the assessee’s case was selected for scrutiny and assessment u/s 143(3) was made vide order dated 08.08.2019 on total income of Rs.1,99,13,195/- after making addition ofRs.1,16,65,455/- u/s 68 of the Act. Accordingly, the tax on such addition was charged as per the provisions of section 115BBE of the Act. In the assessment order, the AO initiated the penalty u/s 270A of the Act and also issued a notice levying of penalty u/s 270A.

In response, to the aforesaid notice, the assessee submitted that firstly, the addition in this case has been made u/s 68 of the Act, therefore, the penalty is leviable u/s 271AAC and not u/s 270A. Assessing Officer duly acknowledged the submissions of the assessee and admitted that it is a wrong initiation, however, he held that it is a mistake apparent on record and rectifiable u/s 154 of the Act as well as curable defect u/s 292B and without giving an opportunity of being heard to the assessee, he has levied the penalty u/s 271AAC vide order dated 27.01.2020.

After hearing both the parties and on perusal of the material placed on record, first of all, we find that it is an undisputed fact that after the passing of the assessment order on 08.08.2019, the assessee had filed a petition before the ITSC on 05.12.2019 which stood admitted and allowed to be proceeded with u/s 245D(1) by the ITSC vide order dated 18.12.2019; and once that is so, it is clear from the provisions of section 245F (2) that ITSC alone has the exclusive jurisdiction. Section 245F (2) reads as under :-

Thus, wherein an application made u/s 245C has been allowed to be proceeded with u/s 245D, then the ITSC shall, until and unless an order is passed under sub-section (4) of section 245D, subject to the provisions of section 245D(3), the exclusive jurisdiction to exercise powers and perform the functions of an income-tax authority under this Act lies with ITSC. This proposition has been reiterated by the Hon’ble Delhi High Court in the case of M/s. Omaxe Limited 364 ITR 423 (Del.). Once that is so, then AO did not had any jurisdiction to initiate or levy penalty u/s 271AAC. Ld. CIT (A) should have held that the penalty order itself is without jurisdiction and infructuous but instead held that the CIT (A) does not have any jurisdiction. Since AO did not have any jurisdiction to pass any order or levy any penalty on the same matter which is sub-judice before the ITSC then impugned order dated 27.01.2020 levying penalty is quashed as infructuous. On this ground alone, the appeal of the assessee is allowed and the penalty is deleted.