NEW DAWATH TRADERS,THANJAVUR vs. ITO, WARD 1 KUMBAKONAM, KUMBAKONAM

This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-18, (hereinafter referred to as “the Ld.CIT(A)”), Chennai, dated 24.09.2024 for the Assessment Year (hereinafter referred to as "AY”) 2017-18.

The main grievance of the assessee is against the action of the Ld.CIT(A) confirming the action of the penalty levied u/s.270A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) to the tune of Rs.2,72,549/- for under reporting of income to the tune of Rs.48,94,072/-

The brief facts are that the assessee firm is engaged in the business of wholesale rice trade in the name and style of M/s. Dawath Traders and filed its return of income (RoI) on 30.10.2017 for AY 2017-18 disclosing total income at Rs.6,52,740/-. Later, the premises of the assessee was surveyed u/s.133A of the Act on 17.03.2017 and based on the survey findings, the return was selected for scrutiny and the AO assessed total income at Rs.55,46,812/- and since, the assessee has offered Rs.30 lakhs under PMGKY Scheme, net-assessed income came down to Rs.25,46,812/-. Pursuant to the assessment order dated 30.12.2019, assessee remitted the tax computed at Rs.8,70,297/- within 30 days of the demand, and didn’t file any appeal against the assessment order dated 30.12.2019. Thus, assessee claimed that it was eligible/entitled for immunity from imposition of penalty u/s.270AA of the Act. However, the AO didn’t agree, because assessee didn’t file Form 68 before him, within the period stipulated under sub-section (2) of section 270AA of the Act, hence, he issued notice u/s.270A of the Act; and despite having taken note of the assessee’s assertion that it had paid tax & interest as per the assessment order u/s.143(3) of the Act dated 30.12.2019 [within the period specified in the notice of demand] and preferred no appeal against the assessment order, still the AO levied penalty u/s.270A of the Act, alleging assessee’s failure to explain on merits against disallowance/addition made in the assessment order and has imposed penalty u/s.270A of the Act for under-reporting of income by levying penalty of Rs.2,72,549/- u/s.270A of the Act @50% of the amount of tax payable on under-reported income. On appeal, the Ld.CIT(A) has inter- alia confirmed the action of the AO by observing that immunity [from levy of penalty u/s.270A of the Act] could have been granted only if the assessee had filed Form 68 within one month from the end of the month in which the assessment order has been received; and in the absence of it, he rejected the claim of immunity and also observed that the assessee didn’t bring any evidence to show that the assessee’s case would fall under the ken of Rule 6DD of the Income Tax Rules, 1962 to exclude the transaction from violation of sec.40A(3) of the Act which led to the disallowance of Rs.47,64,072/-.