9911796707
TMI Blog2025 (5) TMI 1495X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds raised by the assessee read as under: "1. That the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi bas erred in law and on facts in sustaining the Penalty of Rs. 19.381/- arbitrarily imposed by the A.Q. u/s 270A of the Income Tax Act, 1961 for under reporting of income, therefore the said Penalty is unsustainable and liable to be deleted. 2. That the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi has erred in law and on facts in sustaining the Penalty of Rs. 19,381/- arbitrarily imposed by the A.O. u/s 270A of the Income Tax Act, 1961, without correctly considering and appreciating the facts on records, therefore the same is liable to be deleted. 3. That the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi has erred in law and on facts in sustaining the Penalty Order passed under section 270A of the Income Tax Act, 1961 by the A.O. is insupportable in law and on facts and is also contrary to the principles of natural justice and equity. 4. That the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi has erred in law and on facts in sustaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act for underreporting since the income assessed was greater than the basic exempt income and there was conscious underreporting/ misreporting of income. Accordingly, he levied penalty on the assessee in terms of Section 270A of the Act @ 50% of the tax payable on the underreported income, amounting to Rs. 19,381/-, which was confirmed by the Ld. CIT(A). 6. Having heard both the parties, we are not in agreement with the Ld.CIT(A) that this is a fit case for levy of penalty u/s. 270A of the Act. Reason being that: i. The AO while levying penalty was not sure whether it was a case of under reporting of income inviting penalty @30% in terms of the provisions of Section 270A(7) of the Act or it was a case of misreporting of income as a consequence of under reporting inviting penalty @ 200% of tax sought to be evaded in terms of the provisions of Section 270A(8) of the Act. 7. A perusal of the provisions of section 270A of the Act reveals that it identifies two different set of defaults for attracting penalty, both inviting different quantum of penalty. The section recognizes underreporting of income as one default and underreporting as a consequence of misreporting, as the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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: Provided that where under-reported income arises out of determination of deemed total income in accordance with the provisions of section 115JB or section 115JC, the amount of total under-reported income shall be determined in accordance with the following formula- (A - B) + (C - D) where, A = the total income assessed as per the provisions other than the provisions contained in section 115JB or section 115JC (herein called general provisions); B = the total income that would have b ..... 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(a) the amount of income in respect of which the assessee offers an explanation and the Assessing Officer or 96[the Joint Commissioner (Appeals) or] the Commissioner (Appeals) or the Commissioner or the Principal Commissioner, as the case may be, is satisfied that the explanation is bona fide and the assessee has disclosed all the material facts to substantiate the explanation offered; (b) the amount of under-reported income determined on the basis of an estimate, if the accounts are correct and complete to the satisfaction of the Assessing Officer or 96[the Joint Commissioner (Appeals) or] the Commissioner (Appeals) or the Commissioner or the Principal Commissioner, as the case may be, but the method employed is such that the income cannot properly be deduced therefrom; (c) the amount of under-reported income determined on the basis of an estimate, if the assessee has, on his own, estimated a lower amount of addition or disallowance on the same issue, has included such amount in the computation of his income and has disclosed all the facts material to the addition or disallowance; (d) the amount of under-reported income represented by any addition made in conformity with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as if it were the total income; and Y = the amount of tax calculated on the total income determined under clause (a) of sub-section (1) of section 143 or total income assessed, reassessed or recomputed in a preceding order. (11) No addition or disallowance of an amount shall form the basis for imposition of penalty, if such addition or disallowance has formed the basis of imposition of penalty in the case of the person for the same or any other assessment year. (12) The penalty referred to in sub-section (1) shall be imposed, by an order in writing, by the Assessing Officer, 97[the Joint Commissioner (Appeals) or] the Commissioner (Appeals), the Commissioner or the Principal Commissioner, as the case may be." 8. The provisions of law, as noted above, identifying two separate set of defaults, it was incumbent on the AO to identify the specific default committed by the assessee, the present being penal proceedings. 9. However as noted above the AO himself was not sure of the default committed by the assessee. 10. This is evident from the order of the AO levying penalty u/s. 270A of the Act, wherein at para 9, he records and holds that the assessee had under reported income w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial statement to the AO relating to the business of dealing in milk and milk products of Mother Dairy through a booth run by him. These facts stand recorded in the assessment order at Page No.2. Thus, the assessee was in possession of complete books of accounts, from which these financial figures had been derived. But it is revealed from the assessment order that without finding any infirmity in the books of accounts or for that the matter rejecting the books of accounts, the AO has estimated the income of the assessee by applying a net profit rate of 1.30% to the total turnover of the assessee. Therefore, the estimation of income by the AO in the present case which has invited the levy of penalty u/s. 270A(3) of the Act allegedly for under reporting of income, we find is saved by exception provided in Sub-section (6) of Clause (b) of the section 270A, since, the estimation is not accompanied by rejection of the books of accounts of the assessee and the AO is apparently satisfied with the Books of accounts of the assessee. 14. For the above reason, therefore, we hold, the addition made in the hands of the assessee by estimating profits earned from his business, could not have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntre, Delhi has erred in law and on facts in sustaining the Penalty Order passed under section 272A(1)(d) of the Income Tax Act, 1961 by the A.O. is insupportable in law and on facts and is also contrary to the principles of natural justice and equity. 4. That the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi has erred in law and on facts in sustaining the Penalty of Rs. 10,000/- u/s 272A(1)(d) of the Income Tax Act, 1961 is much too high and excessive and deserves to be deleted. 5. That the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi has erred in law and on facts in sustaining the Penalty Order which is without Jurisdiction, void ab-initio and liable to be quashed. 6. That the impugned Assessment order is un sustainable in law therefore the Penalty imposed under section 272A(1)(d) of the Income Tax Act, 1961 by the A.O. is also unsustainable in law and liable to be deleted. 7. That any other relief or reliefs as your honour may deem fit in the facts and circumstances of the case be granted. 8. Your humble appellant craves leave to add, amend or withdraw of any Grounds of Appeal on/or before hearing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not amount to giving of opportunity of being heard. Copy of the said Judgment is enclosed at P.B. No.55-61 As soon as the assessee came to know about the assessment proceedings the assessee has duly complied with the notice issued under section 142(1) of the Income Tax Act, 1961 dated 17.01.2018 and filed return of income along with Audit Report which has duly been acknowledged by the Ld. A.O. in the Assessment Order passed under section 143(3) of the Income Tax Act, 1961(P.B. No.62-65). On Page 2 of the impugned Assessment Order, which is reproduced as under: - (Quote) A show cause notice dated 23.08.2019 was issued u/s 144 of the LT. Act, 1961 and served upon the assessee at 15 Rajput, C/o 56 APO, 100000, Farrukhabad through speed post no. EU053799715IN as well as e-filing portal of the assessee, whereby the date of compliance was fixed on 05.09.2019. In compliance to the above mentioned notice dated 23.08.2019, the assessee filed an online request on 27.08.2019 through his e-filing portal to adjourn the case. Vide this office notice dated 09.09.2019 issued w/s 142(1), the next date for compliance was fixed on 16.09.2019. On 24.09.2019, through his e-filing portal t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment proceedings and filed replies. The assessee reacted bonafidely by complying to notice under section 142(1) of the Income Tax Act, 1961 dined 17.01.2018 albeit after the due date prescribed in notice under section 142(1) of the Income Tax Act, 1961 dated 17.01.2018." 23. We have gone through the submissions demonstrating reasonable cause for not complying with the notice on account of which penalty of Rs. 10,000/- was levied u/s. 272A(1)(d) of the Act and are convinced that the assessee had reasons for not complying with the notices and the fault could not be placed at the door of the assessee. He has pointed out that the notice which went uncomplied was addressed to his Armed Forces address, being an ex serviceman. But since he had since retired from the Armed Forces and was running his Mother Dairy booth in Delhi while he was residing in Farrukhabad, e-filing the return of income mentioning the address at Farrukhabad, therefore, the notice never reached him and went unattended. He has also pointed out that thereafter when he became aware of the ongoing assessment proceedings, he complied with all other notices. 24. The above facts have not been controverted by the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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