SRI AMMAN TEXTILES,ERODE vs. ITO, WARD-2(1), ERODE

The ld. DR Ms. T. Mythili, JCIT relied on the order of the ld. CIT(A).

Heard both the parties and perused the material available on record. On careful reading of para 8 of the decision of the Hon’ble High Court in the case of Natarajan Anandh Kumar v. DCIT (supra), we note that the Hon’ble High Court was pleased to observe that since the return of income was accepted and consequently, the total tax liability therein was also accepted, it is a fit case to condone the delay filing the application for immunity from imposition of penalty. In the present case, we find that the assessment order was passed on 26.10.2023 and the assessee requires to file Form 68 claiming immunity within 30 days from the end of the month in which the assessment order was passed, thereby, it is clear that the assessee is required to file Form 68 on or before 30.11.2023, but, however, the assessee filed Form 68 only on 07.03.2024 with a delay of 97 days, which is evident from pages 23 & 24 of the paper book. Admittedly, the assessee filed return of income in response to the notice under section 148 of the Act, which is evident from para 3 of the assessment order dated 26.10.2023, which is on record. We note that the assessee explained the delay in filing Form 68, which is reproduced by the ld. CIT(A) in page 6 of the impugned order. On perusal of the same, we note that the assessee is a FIRM having two partners, father & son and we note that the wife of one of the partners, who is also mother of the other partner, was expired on 07.10.2023. Therefore, we find the explanation offered for the said delay is bonafide, which really prevented the assessee in filing Form 68 in time. The Hon’ble High Court, in the case of Natarajan Anandh Kumar v. DCIT (supra), observed and held as under: 8. The follow-on question is whether the facts and circumstances justify exemption from imposition of penalty and whether the application in such regard was filed in time. It is evident from sub-s. (2) of s. 270AA that the application is required to be filed within one month from the end of the month in which the order referred to in cl. (a) of sub-s. (1) was issued. Since such order was issued on 9th March, 2023, the one month period would run from 31st March, 2023. If so computed, the application should have been filed on or before 30th April, 2023. Instead, the application was filed on 31st May, 2023. The delay is about one month beyond the stipulated period. By taking into account the fact that the gross total income disclosed by the petitioner in the return of income was accepted in order dt. 9th March, 2023 and the fact that the total tax liability of Rs. 3,68,906, as disclosed in the return of income, was also accepted in order dt. 9th March, 2023, this is a fit case to condone the delay of 30 days in filing the application for immunity from imposition of penalty. Therefore, the delay is condoned.

Turning to the order imposing penalty, the said order proceeds on the basis that the assessed income is Rs. 18,18,870. The under reported income has been computed in terms of cl. (b) of sub-s. (3) of s. 270A. While undertaking this exercise, sub-s. (6) of s. 270A has not been taken into account. Sub-s. (6)(a) of s. 270A, in relevant part, is set out below: "(6)(a) the amount of income in respect of which the assessee offers an explanation and the AO or the CIT(A) or the CIT or the Principal CIT, as the case may be, is satisfied that the explanation is bona fide and the assessee has disclosed all the material facts to substantiate the explanation offered;"

As per cl. (a), the amount of income in respect of which the assessee offers an explanation, which is accepted as bona fide is liable to be excluded provided all material facts were disclosed. This case appears to fall within the scope of cl. (a) of sub-s. (6) of s. 270A. In any event, since the order rejecting the application for immunity from imposition of penalty warrants interference, the consequential order is also liable to be quashed.

For reasons set out above, the impugned orders dt. 24th Aug., 2023 and 2nd Sept., 2023 are quashed. As a consequence, the first respondent is directed to re-consider the application for immunity from imposition of penalty on merits by taking into account the observations set out in this order. There shall be no order as to costs. Consequently, connected miscellaneous petitions are closed.

On careful reading of the above, we find the facts and circumstances before the Hon’ble High Court in the case of Natarajan Anandh Kumar v. DCIT (supra) are similar and the findings thereon as rendered by the Hon’ble High Court is applicable to the facts of the present case. Thus, the delay of 97 days is condoned and the Assessing Officer is directed to reconsider Form 68 filed on 07.03.2024 placed at pages 23 & 24 of the paper book for immunity from imposition of penalty on merits by taking into account the observations of the Hon’ble high Court in the case of Natarajan Anandh Kumar v. DCIT (supra). Thus, the ground raised