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Facts
The assessee, a co-operative society, filed its return declaring 'Nil' income after claiming deduction under Section 80P(2)(a)(i) for Assessment Year 2018-19. The AO disallowed a deduction of Rs. 7,22,911/- on account of interest on investments and levied a penalty of Rs. 4,40,578/- under Section 270A for misreporting income. The CIT(A)/NFAC dismissed the appeal as the assessee failed to respond to notices and present its case.
Held
The Tribunal noted that the assessee did not represent its case before the AO or CIT(A)/NFAC, and the CIT(A)/NFAC had not adjudicated the case on merits. In the interest of justice, the Tribunal decided to grant one more opportunity to the assessee.
Key Issues
Whether the penalty under Section 270A for misreporting of income is leviable when the assessee failed to present its case before the lower authorities, and whether the matter should be remanded for fresh consideration.
Sections Cited
250, 270A, 80P, 80P(2)(a)(i), 270A(8), 270A(9)(a)
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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI. WASEEM AHMED & SHRI. KESHAV DUBEY
ORDER
Per Keshav Dubey, Judicial Member :
This appeal at the instance of the assessee is directed against the Order of CIT(A)/NFAC vide DIN and Order No. ITBA/NFAC/S/250/2024- 25/1066189154(1) dated 28.06.2024, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’), for the Assessment Year 2018- 19. The assessee has raised the following grounds of appeal:
2. The brief facts of the case are that assessee is a registered Co-operative Society engaged in providing credit facilities to members only. The return of income for the Assessment Year 2018-19 was filed on 18.09.2018 by declaring a total income of Rs.Nil after claiming deduction under section 80P(2)(a)(i) of the Act. Thereafter, the case was selected for scrutiny and the AO has made addition of Rs.7,22,911/- on account of disallowance of deduction claimed under section 80P of the Act in respect of interest on investments. Further, the AO has levied penalty amounting to Rs.4,40,578/- by passing the Order under section 270A of the Act dated 23.03.2024 by observing that as the interest income of Rs.7,22,911/- was disallowed and added to the total income of the assessee, this under reporting of income is in consequence of misreporting of income. Accordingly, the AO was of the opinion that the default is covered under section 270A(8) r.w.s. 270A(9)(a) of the Act.
Aggrieved by the Penalty Order dated 23.03.2024 passed under section 270A of the Act, the assessee preferred appeal before the CIT(A)/NFAC. The Page 4 of 5 NFAC dismissed the appeal on the ground that all the notices were served duly upon the assessee through email but the assessee opted not to respond to the any notices for the reason best known to them. The ld. CIT(A) also observed that no documents were produced in support of grounds of appeal or to rebut the Penalty Order. Accordingly, the CIT(A) held that the assessee is not interested in prosecuting the present appeal on merits and accordingly, dismissed the appeal of the assessee.
4. Aggrieved by the Order of CIT(A)/NFAC, assessee has filed the present appeal before this Tribunal.
We have heard the rival submissions and perused the material available on record. Before us, both the parties fairly conceded that the assessee could neither represented their case before the AO nor could submit any details / explanation / documents / information in support of grounds of appeal or to rebut the Penalty Order before the ld. CIT(A)/NFAC also. Further, we also take note of the fact that ld. CIT(A)/NFAC has also no adjudicated the case on the merits of the grounds of appeal filed by the assessee. Therefore, we are of the opinion that in the interest of justice and fair play and as requested by the AR of the assessee, one more opportunity may be granted to the assessee to substantiate its case. Considering all the above facts, we inclined to remit the entire issue in dispute back to the file of AO for fresh consideration in accordance with law. Needless to say, reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to co-operate with the proceedings before the AO and to file the relevant submissions / evidences / information which would be essential and required for the proper adjudication of the case. We clarify that in case of further default, the assessee shall not be entitled for any leniency. It is ordered accordingly.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Pronounced in the court on the date mentioned on the caption page.