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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.
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.
ITA No.360/Hyd/2024 Page 2
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.
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.
Any other ground that may be urged at the time of hearing.”
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.
ITA No.360/Hyd/2024 Page 3
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
ITA No.360/Hyd/2024 Page 4
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
ITA No.360/Hyd/2024 Page 5
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.
Order pronounced in the open Court on 16th July, 2024. Sd/- Sd/- (K. NARAIMHA CHARY) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad. Dated: 16.07.2024. * Reddy gp Copy of the Order forwarded to : 1. Shri Soma Sekhar Polavarau, 102, 7-1-77/2/A, Sri Sai Jyothi Enclave, Dharam Karan Road, Ameerpet, Hyderabad-500 016 2. Income Tax Officer, Ward 6(2), Hyderabad. 3. Pr. CIT, Hyderabad. 4. DR, ITAT, Hyderabad. 5. Guard file. BY ORDER,