SUMAN CHHABRA,JAMMU AND KASHMIR vs. WARD 1(1), JAMMU, JAMMU AND KASHMIR

The Ld. CIT(A) erred in confirming the AO's action, as the AO failed to record specific satisfaction at the conclusion of the assessment proceedings regarding the intention to levy penalty for misreporting or underreporting, as required under section 270A.

4. The brief facts emerging from records are that the assessee has filed his return declaring a total income of Rs. 3,40,490/- and on the basis of information gathered by the AO that the assessee has made an investment in purchase of immovable property amounting to Rs.9 (Nine) lakhs during the financial year 2016-17 (relevant to the year under appeal) and in absence of proper representation before the AO to various notices issued by the department the assessment was completed ex parte u/s 147 r.w.s. 144 on 07.02.2022 on a total income of Rs.25.90 lakhs. 4.1 Penalty u/s 270A has been initiated for misreporting of income leading to concealment of income and in absence of any representation or explanation in response to such penalty, notices issued on four different dates 07.02.2022, 04.04.2022, 08.08.2022 and lastly 16.08.2022 the AO has imposed penalty amounting to Rs.12.32 lakhs for misreporting of income (@ 200% of the tax amount).

5. The penalty matter carried in appeal before the first appellate authority has been dismissed without admitting the said appeal for adjudication on merits, refusing to condone the delay of nearly six months in filing the appeal.

6. In course of hearing before the tribunal, the ld. AR of the assessee submitted that in the instant case, the delay in filing the appeal before the first appellate authority amounting to 169 (One Hundered Sixty Nine) days has been explained in form no. 35 itself and assessee has prayed for condonation of delay on the ground that during that period of time the daughter of the assessee was facing divorce proceedings and as a result, the assessee was passing through a very stressful phase and was mentally disturbed, and could not contact his lawyers for filing of the appeal in time. He further submitted that the delay in filing the appeal was not intentional and there was no wilful default on the part of the assessee and the assessee has not gain anything by filing the appeal late. 6.1 He further stated that the appellant has also deposited 20% (Twenty) of tax demand arising out of quantum addition and the order against the quantum addition is also pending in appeal before the ld. first appellate authority and the ld. CIT(A) was informed to please keep the penalty proceedings in abeyance till the disposal of the appeal in quantum which however has not been done.

6.2 Similar prayer was also made before the AO to keep the penalty proceedings in abeyance till disposal of quantum appeal but the AO has not heeded to the said prayer. As such, he submits that since the question of under reporting and mis representing of income is directly linked to the quantum proceedings which is pending before the ld. CIT(A) this particular penalty appeal may also be remanded back to the files of the ld. CIT(A) to be considered and decided together with the quantum appeal. Before concluding, he submits that since the assessee was prevented by sufficient cause from filing the appeal before the ld. first appellate authority within time and the delay being not intentional the delay of 169 days may please be condoned and the matter may be remanded back to the files of the ld. first appellate authority for adjudication on merits. 6.3 The ld. DR relied on the order of the ld. CIT(A) but has no objection if the matter is remanded back to the file of the ld. CIT(A) for considering the penalty matter along with the quantum appellate proceedings in tandem which should be decided together, to render proper justice.