2022 (3) TMI 1394 - AT - Income Tax

Penalty u/s. 271FA - non-compliance of provisions of Section 285BA(1) - HELD THAT - The said penalty order was challenged by assessee by filing first appeal before 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 infact 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. We are setting aside appellate order passed by 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 CIT(A) is the correct designated appellate authority to adjudicate first appeal arising from an penalty order passed by AO u/s 271FA.

Summary

Issues involved:
1. Jurisdiction of CIT(A) in adjudicating penalty orders under Section 271FA of the Income-tax Act, 1961.

Detailed Analysis:

Issue 1: Jurisdiction of CIT(A) in adjudicating penalty orders under Section 271FA of the Income-tax Act, 1961:
- The appeals raised a common issue regarding the jurisdiction of the Commissioner of Income Tax (Appeal) [CIT(A)] in adjudicating penalty orders under Section 271FA of the Income-tax Act, 1961.
- The initial penalty order was challenged by the assessee before the CIT(A), who dismissed the appeal stating that the appeal against the penalty order under Section 271FA is not maintainable before the CIT(A) as per Sections 246 and 246A of the Act.
- The Tribunal observed that the CIT(A) is the appropriate authority designated for adjudicating the first appeal against a penalty order passed by the Assessing Officer under Section 271FA of the Act, as per Section 246A(1)(q) of the Act.
- The Tribunal referred to decisions of Co-ordinate Benches in Chandigarh and Chennai, where it was held that appeals against penalty orders under Section 271FA shall lie with the CIT(A) as per Section 246A(1)(q) of the Act.
- Therefore, the Tribunal set aside the CIT(A)'s order as not sustainable in law and directed the matter to be remanded back to the CIT(A) for fresh adjudication, emphasizing that the CIT(A) is the correct designated appellate authority for such appeals.
- The Tribunal instructed the CIT(A) to provide proper hearing to the assessee, pass a reasoned order on all raised issues, and consider the evidence and explanations submitted by the assessee in accordance with the law.
- Consequently, the appeal filed by the assessee was allowed for statistical purposes, and similar directions were given for other related appeals, which were also allowed for statistical purposes.

This detailed analysis highlights the Tribunal's decision regarding the jurisdiction of the CIT(A) in adjudicating penalty orders under Section 271FA of the Income-tax Act, 1961, based on the provisions of the Act and relevant precedents cited during the proceedings.