Facts
The assessee claimed exemption under section 54F for a residential property purchased with his father, but the AO denied it, stating the assessee owned multiple properties. Consequently, an addition was made, and penalty proceedings under section 270A were initiated for alleged misreporting. The assessee sought immunity from penalty under section 270AA, having paid the due tax, but this was denied by both the AO and CIT(A).
Held
The Tribunal held that the assessee had complied with the provisions of section 270AA(1) by paying the tax and seeking immunity. However, the application in the prescribed form number 68 was delayed due to technical glitches on the IT portal during the Covid-19 pandemic, and the assessee had provided evidence of this. The Tribunal noted that no opportunity of hearing was provided to the assessee before rejecting the immunity application.
Key Issues
Whether the assessee is eligible for immunity from penalty under section 270AA despite a delay in filing the prescribed form, considering the circumstances of the Covid-19 pandemic and technical issues with the IT portal.
Sections Cited
270A, 270AA, 54F, 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
PER PRASHANT MAHARISHI, AM:
This appeal is filed by the assessee against the appellate order passed by the National faceless appeal Centre, Delhi (the learned CIT (A)) for assessment year 2018 – 19 dated 25/5/2023 wherein the appeal filed by the assessee against the order passed under section 270A of the act by the National e-Assessment Centre, Delhi (the learned AO) leaving the penalty under section 270A (9) at ₹ 757,438/– ,was dismissed.
Assessee aggrieved with the same raised following grounds in this appeal: –
“1. The learned CIT (A) misdirected himself in not appreciating that the Appellant’s case did not amount
The learned CIT (A) failed to note that the appellant had a meritorious case in quantum proceedings and hence the question of levy of penalty u/s 270A did not arise.
The learned CIT (A) fell in error of law in not appreciating that, the Appellant was holding one residential house jointly along with his father and hence clause(a)(i) of the proviso to section 54F of the Act, had no application to such house.
Without prejudice to the above it is submitted that the learned CIT (A) failed to appreciate that there was no question of underreporting of income, since there was no suppression of facts by the Appellant and there was only a difference in interpretation of the section, on fully disclosed facts.
The learned CIT (A) was not justify din not addressing the contentions raised by the Appellant.”
Brief facts of the case shows that assessee is an individual, mechanical engineer by profession engaged as a consultant. Assessee was issued notice under section 142 (1) of the Act. It was noted that assessee has claimed exemption of ₹ 1,838,442/– under section 54F of the income tax act. The assessee was asked to produce the copies of the sale deed and purchase deed of the properties as well as purchase deed of new asset to substantiate the claim of the deduction under section 54F
In response to penalty notice assessee filed his reply on 26/4/2021 wherein it was stated that
i. Flat number 1502 was received through inheritance from his mother on her demise which is not purchased by the assessee and the other houses purchased by the assessee along
ii. The assessee has accepted the stand taken by the AO and has paid the necessary tax along with the interest. It was further stated that as per section 270AA assessee could apply for immunity for imposition of penalty under section 270A as assessee has paid the due tax thereon accepting the demand and assessee does not want to file an appeal against the said order. Therefore, assessee requested to granting immunity from imposition of penalty and to drop the penalty proceedings under section 270A of the act.
The learned AO held that assessee has not filed a formal application for immunity from levy of penalty in the prescribed form number 68 before the AO as per the provisions of section 270AA of the act within the time limit and therefore assessee is not entitled to the immunity. Assessing officer further served to him notices but assessee did not respond. Therefore AO held that assessee has underreported as income which is in consequence of misreporting and levied penalty under section 270A (9) of ₹ 757,438 by order under section 270A of the act dated 11/1/2022.
The learned authorized representative vehemently submitted that
i. Even on the merits, the claim of the assessee under section 50 4F is maintainable as assessee is joint owner along with his father in one of the house property and therefore it cannot be said that assessee is owner of the property where he is a joint owner. For this proposition he relied on the decision of the coordinate bench in
ii. It was further submitted that the assessment order was passed on 7/4/2021 and in penalty proceedings on 26/4/2021 assessee sought an immunity. He referred to paragraph number 4 of the penalty order wherein the last paragraph of the submission the assessee has sought immunity and stated that assessee has not filed any appeal and paid the due tax thereon. This issue has not been decided by the learned assessing officer.
iii. With respect to filing of form number 68 it was specifically stated before the learned CIT – A in paragraph number 4. It was further stated that delay in filing form number 68 is merely due to. Of Covid 19 second wave from April 2021 to August 2021 and further the income tax portal was revamped on 7 June 2021 where forms and functionality could not be accessed due to technical glitches on the portal and delay has happened due to oversight.
iv. It was also claimed that assessee has tried to file the form number 68 however getting an error while filing the same. Before CIT appeal
The learned departmental representative relied upon the orders of the lower authorities. It was further stated that assessee has not filed form number 68 in time and therefore could not be granted immunity from penalty. Therefore it is correctly rejected by the learned CIT – A.
We have carefully considered the rival contention and perused the orders of the lower authorities. Admittedly, the assessee was denied benefit of exemption of section 54F of the act. Assessee has accepted the addition and did not file any appeal. Assessee has also paid the due tax thereon. Assessee submitted before the assessing officer within one month of the assessment order that he would like to apply for immunity from the penalty by applying the provisions of section 270AA of the act as he has paid the complete tax and does not want to pursue the addition in further appeal. However, instead of considering the same, the learned assessing officer levied penalty under section 270A of the act. Undisputedly the learned assessing officer has also noted that assessee has paid the tax due as well as has not filed an appeal before the learned CIT – A. Before the learned CIT – A assessee has given a reason why he could not file form number 68 in time but intimated to the assessing officer about the immunity provision and complying with those conditions in
In the result, appeal of the assessee is allowed as indicated above for statistical purposes.
Order pronounced in the open court on 31.01.2024.
Sd/- Sd/- Sd/- Sd/- (VIKAS AWASTHY) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 31.01.2024 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, Mumbai 4. 5. Guard file. BY ORDER, True Copy//
Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai