2025 (3) TMI 1113 - AT - Income Tax

Penalty u/s 270A - underreporting of income - HELD THAT - CIT(A) while deciding the appeal had dealt with ground nos.7 to 11 regarding section 270AA of the Act and failed to deal with ground nos.1 to 6 regarding levying penalty under section 270A of the Act It is well settled principle of law in interest of justice it is considered expedient to restore the matter to the file of the CIT(A) for fresh decision in accordance with law. Appeal filed by assessee is allowed for statistical purposes.

Summary

In the case before the ITAT Delhi, the appellant challenged the penalty order dated 16.09.2021 issued by the National Faceless Assessment Centre under Section 270A of the Income Tax Act, 1961, for the Assessment Year 2017-18. The appellant had initially declared an income of Rs. 9,88,65,480/- and made a suo moto disallowance under Section 14A of Rs. 18,14,783/-. Subsequently, to avoid litigation, the appellant offered an additional disallowance of Rs. 7,62,56,056/-, which was accepted by the AO without identifying errors in the original claim. The AO imposed a 50% penalty for underreporting income.The appellant's appeal to the CIT(A) was dismissed, prompting the current appeal. The appellant argued that the CIT(A) failed to address grounds 1 to 6, which contested the mechanical imposition of the penalty under Section 270A, while only addressing grounds 7 to 11. The appellant cited the Delhi High Court decision in PCIT vs. Caraf Builders & Constructions Pvt. Ltd., arguing that the suo moto disallowance negates the inference of underreporting income.The Departmental Representative highlighted the provisions of Section 270AA(2) regarding timelines for immunity. The Tribunal found that the CIT(A) did not address all grounds, particularly those related to the penalty under Section 270A. Consequently, the Tribunal restored the matter to the CIT(A) for a fresh decision, allowing the appeal for statistical purposes. The order was pronounced on February 4, 2025.