CIT(A) has no jurisdiction to allow or reject claim of immunity from penalty u/s 270AA – ITAT

CIT(A) has no jurisdiction to allow or reject claim of immunity from penalty u/s 270AA – ITAT

In an important judgment ITAT has held that First Appellate Authority has no jurisdiction to enter into the question of allowing or rejecting claim of the immunity from imposition of penalty u/s 270AA of the Income Tax Act 1961.

ABCAUS Case Law Citation:
ABCAUS 3777 (2023) (07) ITAT

In the instant case, the assesse had challenged the order passed by Commissioner of Income Tax (Appeals), in sustaining the penalty u/s 270A of the Income Tax Act, 1961 (the Act) towards under reporting of income.

The appellant assessee was a commission agent. During the course of survey proceedings the appellant was found maintaining two sets of books of account – one for income tax purposes and other for business purposes.

It was revealed that the appellant has made out of books sales which were not recorded in the books of account. On such facts the Assessing Officer (AO) made addition towards undisclosed profit and also addition u/s 69A of the Act on account of unexplained deposits in the bank account. Penalty proceedings were initiated u/s 270A of the Act.

Before the Tribunal, the ground taken by the assessee was that he was eligible for immunity u/s 270 AA of the Act because he had fulfilled the two conditions of payment of demand within specified time and not filed appeal against the assessment order.

The Tribunal observed that admittedly no application was filed before the AO in terms of Section 270AA while sub section (2) of section 270A provides that application for immunity shall be made within one month from the end of the month in which the assessment order has been received and shall be made in such form and verified to such manner as may be prescribed.

The Tribunal further observed that sub section (3) provides that if the two fundamental conditions about payment of tax demand in the specified period and non-filing of appeal against assessment order are fulfilled, then the assessing officer shall grant immunity from imposition of penalty u/s 270A.

The Tribunal also observed that sub-section (4) of 270AA of the Act provides for a time limit for the Assessing Officer to pass an order accepting or rejecting the application for immunity.  Most importantly sub section (5) of section 270AA provides that an order of accepting or rejecting such application shall be final.

The Tribunal noted that no application was filed before the AO and during the appellate proceedings, for the first time assessee had claimed that he was eligible for immunity from imposition of penalty u/s 270AA of the Act and CIT(A) determined the issue against the assessee holding that as the penalty proceedings were initiated u/s 270A(9) of the Act provisions of section 270AA are not applicable. The CIT(A) also gave a finding that it was a case of under reporting of the income in the nature of misreporting, therefore, the case of assessee falls within the ambit of Section 270A(9) of the Act.

The Tribunal opined that the First Appellate Authority had no jurisdiction to enter into the question of allowing or rejecting claim of the immunity from imposition of penalty u/s 270AA of the Act. The assessee at first instance had not made an application as per the provisions of Section 270AA of the Act, therefore, there was no order of AO u/s 270 AA of the Act. Even if it is assumed from the argument of the assessee that challan etc.were submitted before the AO to claim the relief and it is implied that there was the order of rejecting the claim of immunity, then also the order stood final and which could not have been matter of challenge before the First Appellate Authority.

Accordingly, the Tribunal dismissed the appeal of the assessee.

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