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Facts
The assessee, a partnership firm, failed to file its return of income. The AO made an addition for income from house property and initiated penalty proceedings under Section 270A for underreporting income. The assessee did not respond to the notice, leading to an ex-parte penalty order. The assessee filed an application for immunity under Section 270AA, which was not disposed of.
Held
The Tribunal held that the penalty order was passed without considering the assessee's application for immunity under Section 270AA. Since the assessee was eligible for immunity and had a valid application pending, the penalty order was unjustified.
Key Issues
Whether the penalty levied under Section 270A is justified when the assessee had filed an application for immunity under Section 270AA which was not considered.
Sections Cited
270AA, 270A, 274, 147, 143(3)
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI SS VISWANETHRA RAVI & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2017-18 arises out of the order of Learned Commissioner of Income Tax (NFAC), Delhi [hereinafter “CIT(A)”] dated 25.02.2025 in the matter of penalty levied by Ld. AO u/s. 270AA vide order dated 29.09.2022.
V.M. Rajasekharan :- 2 -:
The assessee is a partnership firm and had not filed its return of income. The A.O reopened the assessment and made an addition of Rs. 56,85,807/- under the head “Income from house property”. The A.O also initiated penalty proceedings u/s. 270A of the Act for underreporting of income by issuing notice u/s 274 of the Act. As the assessee did not respond to the said notice, the A.O passed an ex- parte order levying penalty of Rs.8,78,457/- in respect of the underreported income. Aggrieved, the assessee filed an appeal before the Ld. CIT(A). However, the Ld. CIT(A) dismissed the appeal, rejecting the assessee’s plea that it had filed an application for immunity before the A.O u/s. 270AA of the Act. The A.O has not disposed of the application. The CIT(A) held that as per the provisions of section 270AA(4) of the Act, the order was not appealable and therefore, dismissed the appeal.
The Ld. Authorized Representative (AR) of the assessee submitted that the assessee is a partnership firm, where one of the partners was seriously ill and the other partners were by his side taking care of him. Therefore, the firm could neither file its return of income nor follow up on the assessment proceedings. The Ld. AR also V.M. Rajasekharan :- 3 -:
submitted that during the assessment proceedings, the assessee had filed a response to the show-cause notice along with the financial statements, memo of income, and proof of payment of taxes.
However, the A.O passed the assessment order without considering the TDS credit and self-assessment tax paid. The Ld AR submitted that if these had been considered, there would have been no demand payable. Further, during the penalty proceedings, the assessee submitted Form-68 for claiming immunity u/s. 270AA of the Act. The Ld. AR contended that the twin conditions were fulfilled, as Form-68 was filed on 20.04.2022 within the prescribed time limit, and the assessee had paid the tax demand and had not filed any appeal against the assessment order before the NFAA. Despite this, the A.O passed the penalty order without considering the Form-68, and the Ld. CIT(A) also dismissed the appeal stating that the order u/s. 270AA of the Act is not appealable.
On the other hand, the Ld. Departmental Representative (DR) relied on the orders of the lower authorities.
V.M. Rajasekharan :- 4 -:
We have heard the rival submissions and perused the material available on record. The A.O passed assessment order u/s. 147 of the Act, making an addition of Rs. 56,85,807/- under the head “Income from house property”. The assessee did not file appeal against the said order. The A.O levied a penalty of Rs. 8,78,457/- u/s. 270A of the Act for underreporting of income in respect the income assessed in order passed u/s 147. The Ld. AR submitted that the assessee is eligible for immunity u/s. 270AA of the Act, having satisfied all the conditions. However, the A.O levied the penalty without discussing the application filed in Form-68. The Ld. CIT(A) also dismissed the appeal without appreciating the assessee’s submissions. Since the assessee was eligible for immunity under section 270AA and had a valid application pending before the A.O, the penalty order passed without considering the said application is not justified. We therefore set aside the order of AO and Ld CIT(A) and direct the A.O to decide the application filed in Form-68 in accordance with law. Accordingly, we remit the matter back to the file of the A.O to decide the application for immunity filed u/s. 270AA of the Act. In view of the above, the appeal filed by the assessee is allowed for statistical purposes only.
V.M. Rajasekharan :- 5 -:
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on 31st day of July, 2025 at Chennai.