ORANGE CITY CREDIT CO-OP. SOCIETY LTD.,NAGPUR vs. INCOME TAX OFFICER, WARD 4(4), NAGPUR
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Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: HON’BLE SHRI S. S. GODARA & SHRI G. D. PADMAHSHALI
IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR (Through Virtual hearing from ITAT, Pune) BEFORE HON’BLE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपऩल सं. / ITA No. 019/NAG/2023 निर्धारण वषा / Assessment Year : 2018-19 Orange City Credit Co-Op. Society Ltd. Anand Plaza-2, Hudkeshwar Road, Raja Peth Bus Stop, Nagpur-440034. PAN: AAAAO2933P . . . . . . . अपीलार्थी / Appellant बिधम / V/s Income Tax Officer Ward-4(4), Nagpur. . . . . . . . प्रत्यर्थी / Respondent द्वधरध / Appearances Assessee by : None for the Assessee Revenue by : Mr Abhay Marathe [‘Ld. DR’] सुनवाई की तारीख / Date of conclusive Hearing : 22/03/2024 घोषणा की तारीख / Date of Pronouncement : 26/04/2024 आदेश/ ORDER PER G. D. PADMAHSHALI, AM; By this appeal the assessee challenges the DIN & order No. ITBA/NFAC/S/250/2022-23/1047262637(1) dt. 14/11/2022 of the National Faceless Appellate Centre [‘NFAC’ hereinafter] for assessment year 2018-19 [‘AY’ hereinafter] passed u/s 250 of the Income-tax Act, 1961 [‘the Act’ hereinafter] which in turn confirmed the order levying penalty passed u/s 270A of the Act by the National Faceless Assessment Centre [‘NeAC’ hereinafter].
Pithily stated facts of the case are that; 2.1 The assessee a credit co-operative society filed its return of income [‘ITR’ hereinafter] declaring loss of ₹1,71,798/- which without variation was summarily processed u/s 143(1) of the Act. Subsequently the case was subjected to scrutiny
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u/s 143(3) of the Act wherein the total income of the assessee was determined at ₹2,66,238 as against its returned loss reported in the ITR filed. As a consequence while framing the assessment the Ld. NeAC initiated the penalty proceedings u/s 270A of the Act for underreporting of income in consequence of misreporting.
2.2 By a show cause notice [‘SCN’ hereinafter] dt. 12/04/2021 u/s 274(1) r.w.s. 270A of the Act the penalty proceedings were initiated. The reasons behind inadvertent reporting of figures in ITR as explained by the assessee could failed to inspire any confidence, in the event the Ld. NeAC culminated the proceedings by imposing penalty ₹1,59,744/- computed @200% of tax payable on underreported income of ₹4,38,036/-.
2.3 Aggrieved assessee carried the matter unsuccessfully in appeal before first appellate authority u/s 246A(1)(aa) of the Act. Still aggrieved by the aforestated imposition of penalty the appellant assessee set-up this appeal on four grounds which substantively alleges that the appellate authority erred in law and facts & circumstance in confirming the penalty u/s 270A of the Act.
The case was called twice; none appeared at the bequest of the assessee, in absence of any letter seeking adjournment, we deem it fit to proceed to adjudicate the matter ex-parte on merits u/s 24 of the ITAT-Rules, 1963. We have heard Ld. DR Mr Marathe and subject to rule 18 of ITAT-Rules, perused the material placed on records and noted that, on the basis of statement/computation of income duly supported by audited financial statement, the income of the appellant was assessed to tax in variation to loss returned in the ITR filed. While framing
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an assessment u/s 143(3) of the Act, the written submission tendered by the auditor admitting his mistake in reporting the figure of his other clients inadvertently in the ITR of the appellant was considered and verified from the audited statement. However while imposing the penalty and confirming it both the tax authorities respectively could lay no reasons to turn a blind eye to the written confirmation filed by the auditor that computation and audited financial accompanied to ITR did correctly disclosed the income chargeable to tax which is finally assessed. During both the proceedings the bonafied mistake committed by the auditor in reporting incorrect figures in ITR from the audited financial statement/report remained unshaken by any adverse findings. For the reasons in our considered view levy of penalty in the instant case was unwarranted. This view also finds support in the Hon'ble Punjab and Haryana High Court’s decision in ‘CIT Vs. Deep Tools Pvt. Ltd’ [2005, 274 ITR 603], wherein it was held that the assessee cannot be made liable for penal action against the bonafied mistake committed by a its professionals.
In addition to above, it also noticed that, in the penalty SCN issued u/s 270A r.w.s. 274 of the Act the Ld. AO did fail to make mention of specific charge of offence committed by the assessee i.e. the Ld. AO did not mention whether the assessee has either underreported its income or misreported its income or underreported in consequence of misreporting of its income. Since these limbs are not inter-changeable and different rates of penalty are provided for different offences as per section 270A of the Act, therefore it was imperative on the part of Ld. AO to specify the correct charge of violation in the SCN, which is a miss.
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The Co-ordinate bench in ‘Kishore D Patil Vs ITO’ [2023, ITA No. 54/PUN/2023] in a similar facts and circumstance has deleted the penalty for AO’s failure to identify & communicate the specific clause of violation from clause (a) to (f) of section 270(9) of the Act. The similar decision can also be traced in ‘Saltwater Studio LLP Vs NFAC’[ITA No. 13/MUM/2023] ‘Satish Pawar Vs ITO’ [ITA No. 361/PUN/2023], ‘Prem Prakash Agrawal Vs DCIT [ITA No. 757/JPR/2023]. Further the Hon'ble Delhi High Court in ‘Schneider Electric South East Asia (Hq) Pte Ltd Vs ACIT’ [WP(C) No 5111 of 2022] while dealing with the denial of immunity from levy of penalty u/s 270A vide para 6 held that; ‘the Respondents' action of denying the benefit of immunity on the ground that the penalty was initiated under Section 270A of the Act for misreporting of income is not only erroneous but also arbitrary and bereft of any reason as in the penalty notice the Respondents have failed to specify the limb - "underreporting" or "misreporting" of income, under which the penalty proceedings had been initiated. (Emphasis supplied)
In view of the above discussion and respectfully following the former judicial precedents, on both the score we deem it fit to set-aside the impugned order and quash the penalty imposed u/s 270A of the Act. Ergo ordered accordingly.
In result, the appeal of the assessee is allowed. In terms of rule 34 of ITAT Rules, the order is pronounced in the open court on this Friday, 26th day of April, 2024.
-S/d- -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; ददनाांक / Dated : 26th day of April, 2024. आदेशकीप्रनिनलनपअग्रेनषि / Copy of the Order forwarded to : 1.अपीलाथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The Pr.CIT Concerned. 4. The NFAC Delhi 5. DR, ITAT, Nagpur Bench, Nagpur 6.गार्डफ़ाइल / Guard File. आदेशानुसार / By Order वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय न्यायादधकरण, पुणे / ITAT, Pune.
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