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Facts
The assessee declared income, and an addition was made on account of disallowance of sundry creditors. The AO initiated proceedings for misreporting, finding that the creditors were not in existence. The assessee challenged the penalty levied, not the quantum addition.
Held
The tribunal found that the NFAC did not examine the merits of the penalty levied under Section 270A in the context of the disallowance of sundry creditors. Therefore, the order was set aside.
Key Issues
Whether the penalty levied under Section 270A was sustainable on merits when the NFAC did not examine the nature of the disallowance of sundry creditors?
Sections Cited
270A
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Income Tax Appellate Tribunal, DELHI BENCHES: G : NEW DELHI
Before: SHRI ANUBHAV SHARMA & SHRI NAVEEN CHANDRA
Assessment Year: 2017-18 Kanvar Corporation, Vs DCIT, A-26, Basement and Ground Circle-50(1), Floor, New Delhi. Naraina Industrial Area, New Delhi – 110 028. PAN: AALFK6427E (Appellants) (Respondents) Assessee by : None Revenue by : Shri Sushil Kumar Kulheri, Sr. DR Date of Hearing : 01.10.2025 Date of Pronouncement : 29.10.2025 ORDER
PER ANUBHAV SHARMA, JM:
This appeal is preferred by the assessee against the order dated 06.02.2025 of the Commissioner of Income-tax (Appeals), NFAC, Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in appeal No.NFAC/2016-17/10066962 arising out of the appeal before it against the order dated 21.12.2021 passed u/s 270A of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the AO, NaFAC (hereinafter referred to as the Ld. AO).
None appeared at the time of hearing though notices have been issued earlier in ordinary course and when issued by RPAD, notice has been received back with the report, ‘there is no such person.’ Thus, no further notices are justified.
The ld. DR was heard and record was perused.
We find that the assessee had declared income at Rs.1,37,72,800/- and, after scrutiny assessment, addition of Rs.6,85,247/- was made on account of disallowance of sundry creditors which led to initiation of proceedings for misreporting the income and the AO had found that the alleged sundry creditors were not in existence as there was no confirmation. The assessee had not challenged the quantum addition and merely approached challenging the levy of penalty which has been sustained by the impugned order wherein it was observed that the assessee had failed to appear for five years in the tax proceedings. However, there is no findings of NFAC on merits to show that the issues giving rise to levy of penalty u/s 270A were examined in the context of nature of disallowance and would the nature of disallowance on account of sundry creditors should result into levy of penalty u/s 270A. Accordingly, we set aside the impugned order to the files of the CIT(A) to pass the order afresh on merits. The appeal is allowed for statistical purposes.