Loading judgment…
Facts
The Assessee initially declared a taxable income of Rs. 35,47,800, then filed a revised return showing Rs. 23,67,830. The Assessee claimed a deduction under Section 80JJAA, which was disallowed by the AO. Consequently, penalty proceedings under Section 270A were initiated for under-reporting income.
Held
The Tribunal held that the non-mentioning of a specific limb of Section 270A(3) in the penalty notice vitiates the entire penalty proceedings. Therefore, the penalty imposed by the AO and confirmed by the CIT(A) was deleted.
Key Issues
Whether the penalty proceedings initiated under Section 270A are vitiated due to non-mentioning of the specific limb of Section 270A(3) in the penalty notice.
Sections Cited
80JJAA, 44AB, 270A, 274, 143, 148
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI
ORDER
PER YOGESH KUMAR, U.S. JM:
The present appeal is filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals/ National Faceless Appeal Centre (‘Ld. CIT(A)/NFAC’ for short), New Delhi dated 07/10/2024 for the Assessment Year 2020-21.
The grounds of Appeal are as under:-
1. “1. The Learned Commissioner of Income Tax (Appeal) erred to dismiss the Appeal without consider the facts & evidence of the case. (A) Notice issue U/s 274 read with Section 270A of the Income Tax Act is not as per Law. (B) The Penalty Order Passed U/s 270A of the Income Tax Act is not a Speaking Order as per law.
(C) Penalty imposed of Rs. 184074/- U/s 270A of the Income Tax Act is wrong & illegal. 2. Your petitioner prays to allow, to add, to delete, to amend any further grounds and evidence at the time of hearing of Appeal. 3. That the necessary relief may be granted to your petitioner.”
Brief facts of the case are that, the Assessee filed return of income for Assessment Year 2020-21 declaring total taxable income of Rs. 35,47,800/- from business or profession. Subsequently the Assessee filed revised return declaring taxable income at Rs. 23,67,830/-. Initially, Assessee had claimed deduction u/s 80JJAA of the Income Tax Act, 1961 ('Act' for short) amounting to Rs. 11,79,965/-. However, as the Assessee had not filed report in Form 10DA as per Section 80JJAA of the Act, before the specified date referred in under Section 44AB of the Act and as the Assessee was not eligible to claim deduction u/s 80JJAA of the Act , the A.O. disallowed the claim of deduction of Rs. 11,79,965/- and added to the total income of the Assessee. Consequent to the said addition,penalty proceedings have been initiated u/s 270A of the Act for ‘under reporting of taxable income’. A penalty order came to be passed on 27/03/2023 u/s 270A for ‘under reporting income’ for the year under consideration.
Aggrieved by the penalty order dated 27/03/2023, Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 07/10/2024, dismissed the Appeal of the Assessee. Aggrieved by the order of the Ld. CIT(A) dated 07/10/2024, Assessee preferred the present Appeal on the grounds mentioned above.
The Ld. Counsel for the Assessee submitted that the A.O. initiated penalty proceedings u/s 270A of the Act against the Assessee for ‘under reporting tax income’. Further submitted that the provision of Section 270A (3) of the Act has Sub Sections, however, A.O. has not mentioned on which limb of Section 270A(3) of the Act has been initiated against the Assessee. The Ld. Assessee's Representative further submitted that due to non-mentioning of the proper limb of the penalty provision, the entire penalty proceedings initiated against the Assessee will be vitiated. Thus, sought for allowing the Appeal.
Per contra, the Ld. Departmental Representative submitted that the penalty has been imposed u/s 270A of the Act against the Assessee for ‘under reporting income’ and there is no ambiguity or the error in initiating the penalty proceedings, therefore, sought for dismissal of the Appeal.
We have heard both the parties and perused the material available on record. As could be seen from the order of penalty the penaltyproceedings have been initiated u/s 270A of the Act and order of penalty has been passed on the ground that the Assessee has committed default within the meaning of Section 270A without any reasonable cause. Accordingly levied the penalty. It is the specific case of the Assessee that the specific limb mentioned in the provisions of Section 270A(3) has not been mentioned by the A.O., therefore, the notice issued u/s 270A(3) is defective. For the sake of ready reference, the provision of Section 270A(3) is reproduced as under:-
“(3)The amount of under-reported income shall be,- (i) in a case where income has been assessed for the first time, - (a) if return has been furnished, the difference between the amount of income assessed and the amount of income determined under clause (a) of sub-section (1) of section 143: (b)in a case where "no return of income has been furnished or where return has been furnished for the first time under section 148].- (A) the amount of income assessed, in the case of a company. firm or local authority, and (B) the difference between the amount of income assessed and the maximum amount not chargeable to tax, in a case not covered in item (A): (ii) in any other case, the difference between the amount of income reassessed or recomputed and the amount of income assessed, reassessed or recomputed in a preceding order:"
The A.O. in the penalty notice as well as in the order of penalty has not specified applicable limb has not mentioned the specific limb in Section 270A(3) of the Act.
It is well settled law that non-mentioning of specific limb in the penalty notice will vitiate the entire penalty proceedings. In view of the above, we delete the penalty imposed by the A.O. which has been confirmed by the Ld. CIT(A) vide order impugned by allowing the Grounds of Appeal of the Assessee.
In the result, the Appeal of the Assessee is allowed.