ORANGE CITY CREDIT CO-OP. SOCIETY LTD.,NAGPUR vs. INCOME TAX OFFICER, WARD 4(4), NAGPUR

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 ITAT-Nagpur Page 1 of 4

Orange City Credit Co-Op. Society Ltd. Vs ITO ITA No.019/NAG/2023 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.

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 ITAT-Nagpur Page 2 of 4

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.

The Co-ordinate bench in ‘Kishore D Patil Vs ITO’ [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.