TMI Blog2023 (3) TMI 1472X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of the case has dejectedly failed to identify or determined and then communicate either through reassessment order or through notice the specific circumstance or incidence i.e. specific clause (a) to clause (g) of s/s (2) of section 270 within which the case of the appellant falls so has to hold income as under-reported to trigger said penal provision. The failure continued further in identifying or determining and showcasing the specific action of the appellant in terms of clause (a) to clause (f) to s/s (9) of section 270 within which such action of the assessee falls so has to jacket or categorise such under-reported income is in consequence of mis-reporting. We note that without adhering to aforestated exercise, the Ld. AO precipitately culminated penal proceedings imposing a penalty @200% of the tax sought to be evaded. Non identification or determination vis- -vis communication of specific clause lineally from sub-section (2) and sub-section (9) would drastically obstruct an assessee from enforcing his right to dismantle the charge alleged against him, thus resulting into violation of principle of natural justice. Non-application of mind by tax authorities while dealing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any of the six sub-limbs as well prescribed in sec.270A(9) (a) to (f) of the Act introduced by the legislature in order to rationalize and bring objectivity, certainty and clarity in the penalty provisions . And that his noncompliance to this clinching effect would not only defeat the legislative mandate but also it renders the amending provisions an otiose. Thus accordingly hold in these peculiar facts and circumstances that both the impugned penalties deserve to be quashed. Assessee appeal allowed. - HON BLE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER For the Appellant : Shri Shardul Sonawane Ms Abhilasha Pawar For the Respondent : Shri Ramnath Murkunde ORDER PER G. D. PADMAHSHALI, AM; These twin appeals for assessment years [in short AY ] 2017-18 2018-19 are assailed against respective orders of National Faceless Appeal Centre, Delhi [in short NFAC ] dt. 06 07/12/2022 passed u/s 250 of the Income-tax Act, 1961 [in short the Act ], 2. Since the issue involved in both these appeals is identical, with the agreement of parties hereto, the matter is heard together for a consolidated order; resultantly the adjudication laid ITA No. 54/PUN/2023 sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a penalty of ₹1,64,392/- i.e. @200% of tax sought to be evaded for under-reporting of income holding it is in the nature of mis-reporting . 5. On an unsuccessful attempt before the first appellate authority, the appellant has set-up a present case for reversal of aforestated penalty on a solitary legal ground as intoned at para 3 herein before. 6. In this admitted factual matrix, our indulgence is called to adjudicate the legal ground and in doing so, without reproducing provision of section 270A of the Act in verbatim, it shall be purposive to state that, from AY 2017-18 Ld. AO, CIT, CIT(A) and PCIT are severally empowered at a discretion to initiate and levy a penalty @50% and @200% of tax sought to be evaded respectively on under-reported income and when such underreported income is in consequence of mis-reporting. Here it is apt to note that, unlike section 271(1)(c) the present penalty provision of section 270A of the Act clearly enumerates seven exclusive circumstances or incidences in clause (a) to clause (g) of s/s (2) which gives rise to under-reported income of a person. And once the incidence of under-reported income is identified or determined, the sub-section (9) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hering to aforestated exercise, the Ld. AO precipitately culminated penal proceedings imposing a penalty @200% of the tax sought to be evaded. We further note wistfully that, in an appeal the Ld. NFAC exercising plenary, coterminous and coextensive jurisdiction could have rightly dealt with this provision; however it too perfunctory ceased the proceedings echoing in line with the Ld. AO. 9. Albeit it is true that present section 270A unlike section 271 does not require the Ld. AO to record satisfaction for invocation of penal provision, but unless the person has been communicated the specific incidence vis- -vis action triggering the imposition of penalty in his case, he could never be able to refute the charge brought out against him. 10. Thus non identification or determination vis- -vis communication of specific clause lineally from sub-section (2) and sub-section (9) would drastically obstruct an assessee from enforcing his right to dismantle the charge alleged against him, thus resulting into violation of principle of natural justice. 11. We understand a traffic constable when catch holds of a rider entering into no-entry or one-way , before he draws a challan on him, he first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther failure on the part of lower tax authorities to showcase which of the specific action of the appellant from clause (a) to (f) of s/s (9) was determinant before imposing the impugned penalty u/s 270A of the Act has rendered the entire proceedings invalid and thus untenable in the eyes of law. Consequently the penalty imposed u/s 270A of the Act being bad in law deserves to be quashed, ergo we order accordingly. 15. In result, both these appeals stands ALLOWED. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Thursday 30th day of March, 2023. CONCURRENT ORDER Dated : 23-06-2023 PER SATBEER SINGH GODARA, J.M. : I have gone through hon ble brother Accountant Member s order quashing both these penalties. I express my full agreement with the same. However, keeping in mind the crucial fact that we are dealing with a newly introduced penalty provision issue i.e., sec.270A of the Income Tax Act, 1961 (in short the Act ) applicable from assessment year 2017-2018 onwards, I deem it appropriate to pass my concurrent order supplementing the hon ble Accountant Member s detailed discussion. 2. There would be hardly any dispute that the Assessing Officer had f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mens rea and actus reus on the part of the appellant to make fraudulent claim of refund and to defraud the public exchequer. Therefore, the action of the Assessing Officer to levy penalty u/s. 270A of the Act is in order and requires no interference. This leaves the assessee aggrieved. 4. Both the learned representatives vehemently reiterated their respective stands against and in support of the impugned penalties. The assessee more particularly argued that both the learned lower authorities have erred in law and on facts in imposing sec.270A penalties in issue without even specifying the relevant limb under sub-section (9) thereof pertaining to misreporting of income . Learned counsel quoted the erstwhile earlier penalty mechanism provided u/sec.271(1)(c) of the Act wherein the law stood duly settled in light of Mohd. Farhan A Shaikh vs. ACIT [2021] 434 ITR 1 (Bom.) (FB); CIT vs. M/s. SSA s Emerald Meadows [2016] 386 ITR (St.) 13 (SC) and CIT vs. Manjunatha Cotton Ginning Factory (2013) 359 ITR 565 (Kar) (HC) that an assessing authority has to specify the corresponding limb in the show cause notice to be issued u/sec.274 of the Act. Learned counsel s case is that the legal positi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he very line of judicial precedents would squarely apply even for the amended penalty provision i.e., sec.270A of the Act as well wherein the legislature has not only prescribed twin limbs of under reporting of income as well as misreporting of income , but also, unlike the earlier provision u/sec.271, this time it has stipulated specific deeming illustrations under both the twin foregoing heads of the under reported income and misreporting of income in sub-sections (2) and (9) (a to f) respectively. In my considered opinion, once the instant twin appeals involve levy of penalty @ 200% of the taxes sought to be evaded and the learned lower authorities have held the assessee to have under-reported his taxable income in consequence to misreporting , the latter limb of misreporting containing six sub-limbs in clauses (a to f) under sub-section- (9) deserve to be read as an extension of sub-section (8) to section 270A only. This indeed seems to be the only possible view as the legislature has incorporated the non-obstante clause Notwithstanding anything contained in sub-sec.(6) or subITA sec.(7) thereby not including the sub-section (9) envisaging the six instances defining misreportin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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