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Facts
The assessee filed an appeal against the order of CIT(A) which confirmed a penalty levied under Section 270A. The penalty was based on a suspected variation, while the valuation report, crucial for the addition, was not available to the Assessing Officer at the time of assessment or even later.
Held
The Tribunal held that the penalty was levied on an estimated addition and that there was no evidence of misreporting or underreporting of income. Since the valuation report was not available, the penalty levied under Section 270A was deemed unsustainable.
Key Issues
Whether penalty under Section 270A is sustainable when the addition was based on an estimate due to the non-availability of a valuation report and there is no evidence of misreporting or underreporting?
Sections Cited
270A, 50C, 50C(2)
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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR
O R D E R Per Bench : This is an appeal filed by the assessee against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 11.09.2025 for the assessment year 2020-21, confirming the penalty levied u/s.270A of the Act 2. It was submitted by the ld.AR that the appeal is a penalty appeal and the quantum matter is pending before the ld.CIT(A). It was also the submission that the main issue for levy of penalty was a valuation report which had not received by the Assessing Officer when the assessment order was passed. It was the submission that even till date the valuation report has not been received nor has been provided too the assessee. It was the submission in page 2 of the order the ld. CIT(A) has categorically condoned the delay, however, in para 5.7 of his order, he has dismissed the appeal of the assessee without condoning the delay. It was the submission, at the outset, that the penalty is being levied on a possible/probable variation which is suspected by the Assessing Officer. It was the submission that even till date there is no evidence of misreporting or underreporting. It was the submission that the penalty may be cancelled.
In reply, ld.Sr. DR submitted that the issues may be restored to the file of ld.AO. It was the submission that the valuation officer is in the process of preparing the valuation report, insofar as the notice has also been issued to the assessee.
We have considered the rival submissions. A perusal of pages 6 & 7 of the assessment order clearly shows that the Assessing Officer has applied the provisions of Section 50C of the Act and the assessee has claimed the benefit u/s.50C(2) of the Act and asked for reference to the valuation officer. The assessment order is dated 22.09.2022, till date, admittedly valuation report is not available with the Assessing Officer. This is nothing but an estimate which has led to the addition and on an estimated addition, penalty is not leviable. It cannot be held that there is misreporting or underreporting of income, especially when there is a power to estimate and even such estimate has not been done by the DVO as yet. This being so, we are of the view that the penalty levied u/s.270A of the Act in the case of the assessee is unsustainable and consequently the same is deleted.