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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad
Before: SHRI K. NARASIMHA CHARY & SHRI MADHUSUDAN SAWDIA
आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M: This appeal is filed by Soma Sekhar Polavarapu (“the assessee”), feeling aggrieved by the order passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), dated 13.02.2024 for the AY 2017-18.
The grounds raised by the assessee are as under :
“ 1. On the facts and in the circumstances of the case, the order of the Ld. CIT(A) is erroneous both on facts and in law.
2. The ld. CIT(A) erred in sustaining the penalty of Rs.3,53,220 levied by the Assessing Officer u/s.270A of the Income Tax Act, 1961.
The Ld. CIT(A) failed to appreciate that the appellant filed all necessary details as called for by the A.O. during assessment proceedings and that the A.O. made an adhoc disallowance of expenditure claimed and made addition.
The Ld. CIT(A) further failed to appreciate that the A.O. while concluding the assessment did not record his satisfaction as to whether the penalty is initiated on account of under report, or on account under reporting consequent to mis-reporting of income, and therefore could not have levied penalty.
5. The Ld. CIT(A) failed to appreciate that the adhoc disallowance made by the A.O. during assessment proceedings cannot be a reason for levy of penalty u/s.270A of the Act. The Ld. CIT(A) further failed to appreciate that the penalty proceedings are independent of quantum proceedings.
6. Any other ground that may be urged at the time of hearing.”
3. Brief facts of the case are that an addition of Rs.5,71,552/- was made by the Learned Assessing Officer (“Ld. AO”) u/s.143(3) of the Income Tax Act, 1961 (“the Act”) for the A.Y. 2017-18 vide order dt.29.12.2019. On the same addition of Rs.5,71,552/-, the Ld. AO initiated penalty proceedings u/s.270A of the Act and levied the penalty of Rs.3,53,220/- u/s 270A(9)(a) of the Act vide his order dated 19/01/2022. Aggrieved by the order of Ld. AO, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) upheld the order of Ld. AO and dismissed the appeal of the assessee. Aggrieved by the order of Ld. CIT(A), the assessee is in appeal before us.
4. The Learned Authorised Representative (“Ld. AR”) submitted that the solitary ground in the appeal is the penalty levied by the Ld. AO u/s 270A(9)(a) of the Act, which have been upheld by Ld. CIT(A). He further submitted that during the assessment proceeding u/s 143(3) of the Act, the Ld. AO did not identify any specific discrepancy in the assessee's books of account. However, the Ld. AO made adhoc addition of Rs.5,71,552/- and on such adhoc addition the Ld. AO levied penalty u/s.270A(9)(a) amounting to Rs.3,53,220/-. For this proposition, he brought to our notice the provisions of section 270A(9)(a) of the Act and contended that no penalty u/s.270A(9)(a) of the Act can be levied on adhoc additions. He further submitted that penalty u/s.270A(9)(a) of the Act can be levied only in case of misrepresentation or suppression of facts.
However in the case of the assessee the Ld. AO did not pointed out any misrepresentation or suppression of facts. Hence the Ld. AR prays before the Bench to delete the penalty levied by the Ld. AO.
Per contra, the Learned Department Representative (“Ld. DR”) placed reliance on the order of Ld. CIT(A) and opposed to the argument advanced by the Ld. AR.
We have heard the rival submissions and also gone through the record in the light of the submissions made on either side. As rightly submitted by the Ld. AR, no discrepancy had been pointed out by the Ld. AO during the assessment proceedings u/s.143(3) of the Act in assessee's books of account.
However, the Ld. AO made the addition on adhoc basis and levied penalty u/s.270A(9)(a) of the Act on such addition. For clear understanding of the case it is relevant to go through Section 270A(9)(a) of the Act, which is reproduced as under :
“ Section 270A (9) (a) The cases of misreporting of income referred to in sub- section (8) shall be the following, namely:— (a) misrepresentation or suppression of facts; (b) ……….”
From the plain reading of the aforesaid section, it is abundantly clear that penalty u/s.270A(9)(a) of the Act can be levied only in case of misrepresentation or suppression of facts on the part of the assessee.
However in the case of the assessee no such misrepresentation or suppression of facts had been identified by the Ld. AO. Further no specific discrepancy had been noticed by the Ld. AO in his order u/s.143(3) of the Act.
Therefore, we are of the confirmed opinion that the case of the assessee does not cover u/s.270A(9)(a) of the Act and hence no penalty u/s.270A(9)(a) of the Act can be levied on the assessee. Under these circumstances, the penalty levied by the Ld. AO is not sustainable. Therefore we quash the order of Ld. CIT(A) and delete the penalty levied by the Ld. AO u/s. 270A(9)(a) of the Act. Accordingly, the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed.