SUB REGISTRAR (SAIDPUR),GHAZIPUR vs. DIRECTOR OF INCOME TAX (I &CI), LUCKNOW

IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT BENCH, VARANASI

BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER

ITA.No.46/VNS/2020 Assessment Year 2018-2019

The Sub-Registrar | The Director of Income Gandhi Road, Saidpur. | v. | Tax (I & CI), Vibhuti Ghazipur, | Khand, Gomti Nagar, Distt. Ghazipur, | Lucknow. Uttar Pradesh – 201 101 | Uttar Pradesh. TAN ALDSO4635B (Appellant) | (Respondent)

For Assessee : | Smt. Madhuri Gautam, Sub Registrar,Saidpur For Revenue : Shri A.K. Singh, Sr. D.R.

Date of Hearing : 05.07.2022 Date of Pronouncement : 07.07.2022

ORDER

PER RAMIT KOCHAR, Accountant Member

This appeal filed by appellant in ITA.No.46/VNS/ 2020 for assessment year(ay) 2018-19 with Income Tax Appellate Tribunal, Varanasi Circuit Bench, Varanasi,U.P. (hereinafter called "the tribunal"), has arisen from penalty order dated 17.12.2019 passed by learned Addl./JDIT (I &

- CI), Lucknow (hereinafter called "the AO") u/s. 271FA of the Income-tax Act, 1961 (hereinafter called "the Act") for non compliances of provisions of Section 285BA(1) of the 1961 Act by the appellant, wherein AO levied penalty of Rs.4,74,500/- (Letter No. ITBA/COM/F/17/2019-20/ 1022499941(1)). - 2. The grounds of appeal raised by appellant in Memorandum of Appeal filed with the tribunal, in ITA No. 46/VNS/2020 for the ay: 2018-19, reads as under : - " 1. Because the Ld. DIT (I & CI) has erred in law and on facts in invoking as also imposing penalty of Rs.4,74,500/- under section 271FA of the I.T. Act, 1961 on the "appellant" as it had duly filed Statement of Financial Transaction (SFT) for the F.Y. 2017-18 within the specified due date.

WITHOUT PREJUDICE TO THE AFORESAID

- 3.BECAUSE , the "appellant" craves leave to put forward further grounds of appeal and/or amend/alter the same before or at the time of hearing." - 3. The brief facts of the case are that the appellant was required to file statement of financial transactions(SFT) for the financial year 2017-18 [relevant to ay: 2018-19] by 31.05.2018 as provided under section 285BA of the 1961 Act, with respect to transactions of purchase/sale by any person of an immovable property valued at Rs.30 lakhs or more. The A.O. observed that the appellant has not filed the said statement of financial transactions by due date, and hence the A.O. issued notice dated 25.09.2018 under section 285BA(5) of the 1961 Act. No reply was filed by the appellant before the AO. Show cause notice was also issued by AO to the appellant on 10.06.2019, u/s 271FA read with Section 274 of the 1961 Act, show causing the appellant as to why penalty should not be imposed on the appellant for failure to furnish statement of financial transaction. Again no compliance was made by the appellant. Further

opportunity was also given by A.O, but, the appellant again did not make any compliance, which led A.O. to impose penalty of Rs.4,74,500/- under section 271FA of the I.T. Act, 1961 for non-compliance of provisions of Section 285BA(1) of the 1961 Act, vide penalty order dated 17.12.2019 passed by AO u/s 271FA for ay: 2018-19.

- 4. Aggrieved by penalty order passed by AO u/s 271FA of the 1961 Act, the appellant has filed present appeal before the tribunal. The appellant did not file first appeal before Learned CIT(A), who is an appropriate First Appellate Authority for adjudicating appeal arising from penalty order passed by AO u/s 271FA of the 1961 Act. - 4.1. Smt. Madhuri Gautam, Sub-Registrar,Saidpur appeared before the Division Bench and filed provisional receipts for filing statement of financial transactions in Form No. 61A for reporting financial period 2017-18, dated 31.05.2018 ( statement ID 810557987310518), which it is claimed were filed on the due date as prescribed under the 1961 Act viz. 31.05.2018, and hence it is claimed that there

was no non compliance on the part of the appellant of the provisions of Section 285BA(1) of the 1961 Act. She has also filed provisional receipts for filing statements of financial transactions in Form No. 61A for the other reporting periods viz. financial year 2018-19, 2019-20 and 2020-11, which are all placed on record in file. She made prayers before the Bench that since the SFT was filed in time for the financial year 2017-18(ay: 2018-19), which is a year under consideration, the penalty is not leviable.

- 5. The Learned Sr. DR submitted that the First Appeal against the penalty order passed by A.O. levying penalty under section 271FA of the I.T. Act, 1961, would lie before Learned CIT(A). - 6. We have considered rival submissions and perused the material on record. We have observed that the appellant has filed an appeal with tribunal directly against penalty order passed by A.O. under section 271FA of the 1961 Act, for the ay: 2018-19 (F.Y. 2017-18), wherein the AO levied penalty of Rs.4,74,500/- u/s 271FA of the 1961

Act for non-compliance of provisions of Section 285BA(1) of the 1961 Act. We are of the considered view that first appeal against penalty order passed by A.O. levying penalty under section 271FA of the 1961 Act would lie before Learned CIT(A), and not before the tribunal. Thus, the assessee erred in filing this appeal directly before the tribunal, and hence this appeal is non-est and not maintainable before the tribunal. In this connection, reference is drawn to provisions of Section 246A(1)(q) of the 1961 Act, which provides that an appeal against order imposing penalty under Chapter-XXI would lie with Learned CIT(A). Section 271FA of the 1961 Act falls under Chapter-XXI of the 1961 Act. In this connection, it is also relevant to reproduce the appellate order passed by ITAT, Varanasi Circuit Bench, Varanasi in the case of Sub-Registrar, Gola Bazar, Dist. Gorakhpur etc., v. DIT (I & CI), DTRTI, Lucknow, in ITA.Nos.75 to 78, 96 to 98/VNS/2019, vide common Order dated 24.03.2022 [in which both of us were part of the Division Bench who pronounced said orders], whereby the Division Bench had taken a view that first appeal against

penalty order passed by A.O. levying penalty under section 271FA of the 1961 Act would lie with Learned CIT(A), keeping in view provisions of Section 246A(1)(q) of the 1961 Act. The relevant extract of the aforesaid tribunal order dated 24.03.2022 are reproduced as hereunder :

"4. We have heard both the rival parties and perused the material on record. We have observed that penalty order dated 26.03.2012 was passed by ld. AO u/s. 271FA of the 1961 Act , levying penalty of Rs.57,200/ against the assessee, for default in complying with the provisions of Section 285BA(1) of the 1961 Act. The said penalty order was challenged by assessee by filing first appeal before ld. CIT(A), who dismissed the appeal of the assessee on the grounds that the appeal against penalty order passed u/s 271FA for infringement of Section 285BA(1) of the 1961 Act, is not subject to challenge before ld. CIT(A) , keeping in view provisions of Section 246 and 246A of the 1961 Act, and hence the appeal was dismissed by ld. CIT(A) as infructuous being not maintainable with ld. CIT(A) and directions were

issued to the assessee to file its appeal with appropriate authority designated for adjudicating such appeals. We are afraid that this finding of ld. CIT(A) is erroneous in the teeth of provisions of Section 246A(1)(q) of the 1961 Act, and in fact ld. CIT(A) is the appropriate authority designated for adjudicating first appeal against an penalty order passed by AO u/s 271FA of the 1961 Act. The provisions of Section 246A(1)(q) of 1961 Act is a residuary provisions which stipulate that first appeal against an order imposing penalty under Chapter XXI shall lie with CIT(A). Undoubtedly, provisions of Section 271FA falls under Chapter XXI of the 1961 Act. Reference is also drawn to Co-ordinate Benches decision of tribunal in the following case, where the similar view was taken, as under :

a. Chandigarh-tribunal order in Sub-Registrar , Fategarh Sahib, v. DIT (CIB), Chandigarh, in ITA no. 1184, 1185, 1186 & 1189/Chd./2010, vide common order dated 22.02.2011, wherein tribunal held as under :

" 5. We have heard the parties and considered the facts and materials on record. First of all, we have to decide whether the appellant can file an appeal before the Tribunal directly without filing of appeal before the CIT(Appeals). In this connection, learned counsel for the assessee brought to our notice that now the CBDT has clarified in F.No.279/M-31/2010-SO(ITJ) on this point. He also filed on record a copy of page No. 5 & 6 of the said Notification. We find that in the above Notification, the CBDT has clarified that u/s 246A(1)(q), of the income-tax Act, the CIT(Appeals) has powers to dispose of any penalty levied u/s 271FA and that there is no legal bar on CIT(Appeals) passing an appeal order against penalty order passed by the DIT (CIB), who is equivalent to the rank of CIT(Appeals). It has also been mentioned in the above Circular that whether CIT(Appeals) and DIT(CIB) are equivalent in rank or not is an administrative issue and it has nothing to do with

the fact that the CIT(Appeals) can hear an appeal filed against an order passed u/s 271FA of the Income Tax Act by Director of Income Tax(CIB). Further it is clarified in the said Circular that u/s 246A(1)(q) of Income Tax Act, CIT(Appeals) has powers to hear an appeal filed against an order passed under Chapter XXI of the Income Tax Act, 1961.

- 6. In view of the above clarification given by the CBDT, in our considered opinion, the appellant should have filed an appeal before the CIT(Appeals) before filing an appeal directly before this Tribunal. In view of this position, we are dismissing all the four appeals filed by the appellant." - b. Chennai-tribunal decision in the case of Sub-Registrar, Salem v. The DIT(CIB)(I/C), Chennai in ITA no. 2009, 2013, 2015 and 2016/Mds/2010, vide common order dated 02.06.2011, wherein the tribunal

has taken a similar view that an appeal against penalty order passed u/s 271FA shall lie with ld.CIT(A) keeping in view provision of Section 246A(1)(q) of the 1961 Act.

Thus, under these circumstances as narrated above, we are setting aside appellate order passed by ld. CIT(A) as not sustainable in the eyes of the law and restore the matter back to the file of ld. CIT(A) for fresh adjudication of all the grievances/grounds of appeal raised by the assessee in its appeal before ld. CIT(A), by holding that ld. CIT(A) is the correct designated appellate authority to adjudicate first appeal arising from an penalty order passed by AO u/s 271FA of the 1961 Act. Needless to say that ld. CIT(A) will give proper and adequate opportunity of hearing to the assessee in set aside remand proceeding while adjudicating first appeal filed by the assessee, in accordance with the principle of natural justice and in accordance with law. The ld. CIT(A) is directed to pass reasoned and speaking order on all the issues raised by the assessee in its appeal filed with ld. CIT(A), while adjudicating denovo the

appeal of the assessee. The evidences /explanations submitted by the assessee shall be admitted by ld. CIT(A) in accordance with law and be adjudicated on merits in accordance with law. Thus, in nut-shell appeal filed by the assessee in ITA no.75/Vns/2019 for ay: 2011-12 is allowed for statistical purposes. We order accordingly.

6.1. We have observed that in the above cases which were decided by tribunal vide common order dated 24.03.2022, Learned CIT(A) has dismissed all the appeals taking a view that first appeal against penalty order passed by A.O. under section 271FA levying penalty for noncompliances of Section 285BA(1) of the 1961 Act, would lie directly to ITAT, which view of the Learned CIT(A) was held to be an erroneous view by the tribunal vide common order dated 24.03.2022. Thus, there could be a bonafide belief on the part of the appellant to file an appeal directly with the tribunal against penalty order passed by A.O. under section 271FA of the 1961 Act for non compliance of provisions of Section 285BA of the 1961 Act, but however the fact of the

matter is that the first appeal against the penalty order passed by AO u/s 2711FA shall lie with ld. CIT(A) and not with tribunal.

- 6.2 Thus, keeping in view our aforesaid discussions, we are inclined to dismiss this appeal filed by the appellant before the tribunal as a non-est appeal being not maintainable , with a further direction that appellant, if so advised, may file first appeal before the Learned CIT(A) against the penalty order dated 17.12.2009 passed by A.O. under section 271FA of the I.T. Act, 1961 immediately on receipt/service of this appellate order, and if that be so, we direct Learned CIT(A) to condone the delay in filing appeal by the appellant. We order accordingly. - 7. In the result, appeal filed by the appellant in ITA no.46/VNS/2020 for ay: 2018-19 stands dismissed as not maintainable, as discussed above. We order accordingly.

Order pronounced in the open Court on 07.07.2022, at Varanasi, U.P.

Sd/- Sd/-

VIJAY PAL RAO RAMIT KOCHAR JUDICIAL MEMBER ACCOUNTANT MEMBER

Varanasi, Dated 07th July, 2022

VBP/-

Copy to

//By Order//

Asst. Registrar, ITAT, Varanasi Bench, Varanasi.