Penalty u/s 270A can not be imposed without first disposing application in Form No. 68 for immunity from penalty
ABCAUS Case Law Citation:
ABCAUS 3664 (2023) (02) ITAT
In the instant case, the appellant assessee had challenged the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) confirming the levy of income tax penalty u/s 270A of the Income Tax Act, 1961 (the Act).
The appellant assessee firm had not filed its return of income u/s 139 of the Act. The assessee also did not file its return of income for the relevant assessment year within the time provided in the notice issued u/s 142(1) of the Act, nor within the time allowed u/s 139(4) of the Act.
Therefore, the AO has issued a show cause notice u/s. 144 of the Act and proposed to pass at best judgment of assessment on the basis of material available on record.
Subsequently, the assessee filed a copy of the profit and loss account. The assessment was completed u/s 144 of the Act accepting the income as returned by the assessee.
The AO initiated penalty proceedings u/s 270A of the Act for ‘under reporting of income’ and thus, a show cause notice was issued.
The assessee submitted that firm had paid tax within 30 days and is claiming immunity u/s 270AA of the Act.
The AO did not dispose of the application filed by the assessee u/s 270AA of the Act and preceded with levy of penalty u/s 270A of the Act on the ground that the assessee has under reported its income and consequence of misreporting and thus, the assessee is not entitled for immunity as provided u/s 270AA of the Act and thus, levied penalty of 200% of the tax sought to be evaded.
The assessee carried the matter in appeal. The CIT(A) dismissed the appeal and upheld the penalty levied by the AO.
Before the Tribunal, the case of the assessee was that, the appellant had filed an application in Form no. 68 and sought immunity from levy of penalty because the assessee has satisfied conditions prescribed u/s 270AA of the Act, but the AO without disposing off application filed by the assessee in Form No. 68 had completed penalty proceedings and levied penalty u/s 270A of the Act.
The Tribunal observed that as per sub section 4 of the 270AA of the Act, the AO is required to pass order accepting or rejecting said application after giving an opportunity of hearing to the assessee. In the instant case, however the AO did not pass an order accepting or rejecting application filed by the assessee as required u/s 270AA(4) of the Act.
The Tribunal opined that on the above ground alone it could be held that the penalty order passed by the AO u/s. 270A of the Act was not maintainable.
However, the ITAT set aside the order passed by the CIT(A) and restored the issue of levy of penalty u/s. 270A of the Act to the file of the AO with direction to deal with the application filed by the assessee in Form No. 68 by passing a speaking order before levying penalty u/s. 270A of the Act.
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