SONALI SUBODH PETHE,THANE vs. ASSESSING OFFICER, NFAC, DELHI, THANE

The appeal of the assessee for the assessment year 2017-18 is directed against the order dated 11.11.2024 passed by the National Faceless Appeal Centre (NFAC), Delhi. The assessee has raised the following grounds of appeal:

Fact in brief is that assessment u/s 143(3) of the Act for the A.Y. 2017-18 was finalized on 12.12.2019 and total income was assessed at Rs. 1,27,87,686/-. In the assessment order, the assessing officer has disallowed claim of deduction of interest u/s 57(iii) of the Act to the amount of Rs. 32,08,266/-, out of the total claim of Rs. 55,36,383/- made by the assessee.

Thereafter, the assessing officer has levied penalty u/s 270A of the Act holding that assessed income was greater than the income determined in the return of income processed u/s 143(1) of the Act. The AO considered that assessee had under-reported his income, therefore, penalty of Rs. 7,78,513/- being 50% of tax on under- reported income was levied.

The assessee filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee after reiterating the fact reported by the assessing officer that assessee has not filed Form No. 68 with the time period as prescribed in sub-section 2 of section 270AA of the Act.

During the course of appellate proceedings before us, the ld. Counsel vehemently contended that assessee has paid the taxes along with interest as per demand notice within stipulated time of one month from the date of assessment order. Therefore, the assessing officer was not justified in not providing immunity to the assessee u/s 270AA of the Act. He further submitted that just on the

The ld. Counsel has also referred the judicial pronouncement of the ITAT Benches as placed in the paper book. On the other hand, the ld. DR supported the order of lower authorities.

Heard both the sides and perused the material on record. During the course of assessment, the assessee has taken loan of Rs. 8,82,90,540/- from M/s. Edelweiss Retails Finance Ltd. and out of this loan amount of Rs. 1,45,44,606/- was advanced by the assessee to M/s. Waman Hari Pethe Sons P Ltd. The assessee has paid interest of Rs. 85,40,413/- on the loan received from M/s. Edelweiss Retails Finance Ltd. and received interest of Rs. 54,05,179/- on amount of loan advanced to M/s. Waman Hari Pethe Sons P Ltd. The rate of interest on the loan obtained and taken were 18% and 13% respectively. Out of total interest paid of Rs. 85,40,413/-, the assessee has claimed Rs. 55,36,383/- as deduction u/s 57(iii) of the Act. However, the assessing officer has restricted the claim of deduction to the extent of Rs. 14,06,606/- on the ground that whole amount of interest cannot be claimed to be attributable to the loan taken by the assessee since assessee has utilized only 16.47% of loan obtained for further giving loan to M/s. Waman Hari Pethe Sons P Ltd. Consequently, the assessing officer has levied penalty u/s 270A of the Act for under-reporting of income to the amount of Rs. 7,78,513/-. The assessee has paid tax along with interest as per demand notice received within one month from the date of assessment order. However, assessee could not upload the Form No. 68 within the time period for getting immunity of penalty. The lower Sonali Subodh Pethe A.Y. 2017-18 authority has not granted the immunity u/s 270AA of the Act for the reason that application in Form No. 68 was filed beyond the time period prescribed u/s 270AA of the Act. We have perused the decision of ITAT in the case of Punam Kanwar Bhati vs ITO (2024) 165 taxmann.com 286 (Jodhpur) wherein held that delay in filing Form No. 68 was only a procedural lapse and not substantive failure and held that assessee was entitled for immunity u/s 270AA of the Act. The assessee has fulfilled all major conditions of payment of tax with interest in time and also not filed any appeal against the assessment order. However, the assessee could not upload the Form No. 68 seeking immunity from levying penalty u/s 270AA as the assessment year 2017-18 was the first year requiring to upload the Form No.

Since the assessee has paid the tax demand along with interest within 30 days from receipt of demand notice and uploading of Form No. 68 was recently introduced during the year under consideration, therefore, the ground no. 2 of the assessee for condoning the impugned penalty u/s 270A is allowed. The ground no. 1 filed by the assessee become academic not required adjudication. Accordingly, the appeal of the assessee is allowed.