PUNIT RASIKLAL SHAH,MUMBAI vs. INCOME TAX OFFICER, MUM

At the outset, it is noted that there is a delay in filing the appeal as pointed out by the Registry. After hearing both the parties and perusing the application seeking condonation of delay filed by the assessee, the contents of which have remain unrebutted before us, we find that there

Briefly, the facts of the case are that the assessment in this case was completed u/s. 143(3) r.w.s. 143(3A) & 143(3B) of the Act of the Income Tax Act, 1961 („the Act‟), vide order dt. 20-01-2021, wherein an amount of Rs. 2,27,850/- was disallowed towards business expenditure claimed by the assessee and penalty proceedings u/s. 270A of the Act were separately initiated. The assessee did not file any further appeal against the quantum order so passed by the AO and after issuance of show cause and considering the submissions filed by the assessee, but not finding the same acceptable, the AO passed the order u/s. 270A of the Act, dt. 29-12- 2021, wherein penalty @200% of the amount of tax payable amounting to Rs. 1,37,314/- was levied for under reporting of income in consequence of misreporting under section 270A(9) of the Act. The assessee thereafter carried the matter in appeal before the Ld. CIT(A), who has sustained the order so passed by the AO and against the said order, the assessee is in appeal before us.

During the course of hearing, the Ld.AR submitted that the assessee be granted the necessary immunity in terms of section 270AA of the Act for the reason that the assessee has not filed any appeal against the assessment order and tax has also been duly paid in terms of demand notice raised by the AO and thus satisfies the necessary condition for grant of immunity in terms of section 270AA of the Act. It was submitted that similar plea was raised before the Ld.CIT(A), which he has failed to consider and the appeal of the assessee has been dismissed. It was accordingly submitted that necessary immunity be provided to the assessee and in support, reliance was placed on the decision of the

Per contra, the Ld. CIT/DR is heard, who has relied on the orders passed by the lower authorities and our reference was drawn to the findings of the Ld.CIT(A), wherein he has stated that since the assessee has not moved any specific application in terms of seeking immunity u/s. 270AA of the Act before the AO, there is no way the Commissioner could have considered the assessee‟s contention in terms of grant of immunity as so provided u/s. 270AA of the Act.

Another contention raised by the Ld.AR was that the assessee could not produce the relevant documentary evidences in support of claim of expenditure at the time of assessment as it was during the pandemic period of Covid-19 when the proceedings were going on and there was complete lock down and lack of staff to make the same available the same during the course of assessment proceedings. It was accordingly submitted that though the quantum proceedings have attained finality, however, in the context of penalty proceedings, to demonstrate bonafide claim of expenses, the assessee may be allowed one more opportunity to place on record necessary documentary evidences in support of claim of expenditure and in this regard, the assessee has moved the necessary application for admission of additional evidence which are vital and essential to support the claim of expenses made by the assessee while filing the return of income and the same may be admitted and where the Bench so decide, the matter may be remitted to the file of the AO for necessary verification.

Per contra, the Ld. DR is heard. It was submitted that the assessee has not filed these evidences before the AO as well as before the Ld.CIT(A). However, where the Bench so decides, the matter may be remanded to the file of the AO for necessary verification.

We have heard the rival contentions and perused the material available on record. The relevant provisions for grant of immunity are contained in section 270AA of the Act and the same read as under:

In terms of the aforesaid provisions, an assessee may make an application to the Assessing Officer to seek immunity from imposition of penalty under section 270A where he fulfills the following conditions, namely: (a)the tax and interest payable as per the order of assessment under sub-section (3) of section 143 has been paid within the period specified in such notice of demand; and (b) no appeal against the assessment order so passed has been filed and (c) where the proceedings for penalty under section 270A has not been initiated under the circumstances referred to in sub-section (9) of the said section 270A. Where the assessee satisfies the aforesaid conditions, the application shall be made within one month from the end of the month in which the assessment order has been received by the assessee and shall be made in such form and verified in such manner as may be prescribed.

In the instant case, it is the claim of the assessee that he satisfied the conditions in terms of deposit of taxes and interest in terms of demand raised and secondly, no appeal has been filed against the assessment order so passed by the AO. At the same time, we find that the assessee failed to appreciate that the penalty in the instant case has been initiated u/s 270A(9) of the Act and in such cases, there is no mechanism for grant of immunity as so provided in terms of section 270AA(3) of the Act. Therefore, it is not just a case where there is lack of diligence on part of the assessee in moving an appropriate application before the AO seeking immunity from levy of penalty rather it is a case where one of the essential conditions for grant of immunity is not satisfied and therefore, the question of moving an application also doesn‟t arise for consideration at first place. The decision of the Coordinate Bench also doesn‟t support the case of the assessee as in the said case, the penalty was not initiated u/s 270A(9) of the Act and thus stand distinguishable. Hence, the contentions regarding grant of immunity from levy of penalty cannot be accepted in the instant case.

Now, coming to the assessee‟s application seeking admittance of additional evidences in support of the claim of the expenditure, we find that the same are germane to the matter under consideration and couldn‟t be submitted earlier during the course of assessment proceedings for reasons beyond the control of the assessee and the matter is remitted to the file of the AO for necessary examination/verification and to decide the matter afresh as per law after providing reasonable opportunity to the assessee. We make it clear that the examination of the additional evidences and findings thereon by the AO are limited to impugned penalty

In the result, appeal filed by the assessee is allowed for statistical purposes.