2020 (10) TMI 360 - AT - Income Tax

Non filing of appeal electronically - Penalty u/s 271(1)(c) on claim for deduction under Sec.80IB(10) denied - CIT (Appeals) dismissing the appeal petition on the basis of alleged compliance default of not having filed electronically - Penalty order is bad in law - HELD THAT - The issue herein involved is squarely covered by an order in the case of All India Federation of Tax Practitioner, Mumbai, Vs. ITO (E)-1(2), Mumbai 2018 (6) TMI 1171 - ITAT MUMBAI as observing that the default on the part of the assessee in filing the appeal in paper form was merely a technical defect which could not be allowed to overshadow the cause of substantial justice. Appeal in all fairness and in the very interest of justice is restored to the file of the CIT(A). CIT(A) is directed to consider the appeal which was electronically filed by the assessee as having been filed on the date on which the same was manually filed in paper form on 21.04.2016, and dispose it off on merits by way of a speaking order. Needless to say, the CIT(A) while disposing off the appeal shall afford a reasonable opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Dismissal of the appeal petition due to compliance default of not filing electronically.
2. Legality of the penalty order under Sec. 271(1)(c) of the Income Tax Act, 1961.

Issue 1: Dismissal of the appeal petition due to compliance default:
The Appellate Tribunal ITAT Mumbai dealt with an appeal against the order passed by the CIT(A)-17, Mumbai, concerning a deduction claimed under Sec. 80IB(10) for profits from a slum project. The AO disallowed the deduction and initiated penalty proceedings under Sec. 271(1)(c) of the Act. The CIT(A) dismissed the appeal as it was manually filed, not electronically, citing an amendment making e-filing mandatory. The Tribunal, referring to a similar case precedent, held that the failure to file electronically was a technical defect and should not deny substantial justice. They directed the appeal to be restored to the CIT(A) for consideration on merits, allowing the appeal if filed electronically within a specified time.

Issue 2: Legality of the penalty order under Sec. 271(1)(c):
The AO imposed a penalty under Sec. 271(1)(c) for the disallowance of the deduction under Sec. 80IB(10). The assessee challenged this penalty order before the CIT(A), who upheld it. The Tribunal, after considering submissions from both parties and relevant case laws, found the penalty order to be unjust due to the technicality of not filing the appeal electronically. They set aside the CIT(A)'s order, directing the appeal to be considered on its merits, filed electronically within a specified time frame. The Tribunal allowed the appeal for statistical purposes, emphasizing the importance of substantial justice over technical considerations in such matters.

In conclusion, the ITAT Mumbai allowed the appeal, emphasizing the importance of substantial justice and directing the appeal to be considered on merits after being filed electronically within a specified time frame.