2022 (7) TMI 432 - AT - Income Tax

Maintainability of first appeal before the tribunal or CIT(A) - Penalty u/s 271FA read with Section 274 - non-compliance of provisions of Section 285BA(1) - HELD THAT - We are of the considered view that first appeal against penalty order passed by A.O. levying penalty u/s 271FA would lie before CIT(A), and not before the tribunal. Thus, the assessee erred in filing this appeal directly before the tribunal, and hence this appeal is non-est and not maintainable before the tribunal. In this connection, reference is drawn to provisions of Section 246A(1)(q) which provides that an appeal against order imposing penalty under Chapter-XXI would lie with CIT(A). Section 271FA of the 1961 Act falls under Chapter-XXI of the 1961 Act. It is also relevant to reproduce the appellate order passed by ITAT, Varanasi Circuit Bench, Varanasi in the case of Sub-Registrar, Gola Bazar, Dist. Gorakhpur etc., v. DIT (I CI), DTRTI, Lucknow, 2022 (3) TMI 1394 - ITAT VARANASI , whereby the Division Bench had taken a view that first appeal against penalty order passed by A.O. levying penalty under section 271FA of the 1961 Act would lie with Learned CIT(A), keeping in view provisions of Section 246A(1)(q) of the 1961 Act. CIT(A) has dismissed all the appeals taking a view that first appeal against penalty order passed by A.O. under section 271FA levying penalty for non-compliances of Section 285BA(1) of the 1961 Act, would lie directly to ITAT, which view of the Learned CIT(A) was held to be an erroneous view by the tribunal vide common order dated 24.03.2022. There could be a bonafide belief on the part of the appellant to file an appeal directly with the tribunal against penalty order passed by A.O. u/s 271FA of the 1961 Act for non compliance of provisions of Section 285BA of the 1961 Act, but however the fact of the matter is that the first appeal against the penalty order passed by AO u/s 2711FA shall lie with ld. CIT(A) and not with tribunal. Thus, we are inclined to dismiss this appeal filed by the appellant before the tribunal as a non-est appeal being not maintainable , with a further direction that appellant, if so advised, may file first appeal before the Learned CIT(A) against the penalty order passed by A.O. under section 271FA of the I.T. Act, 1961 immediately on receipt/service of this appellate order, and if that be so, we direct Learned CIT(A) to condone the delay in filing appeal by the appellant.

Summary

Issues:
Appeal against penalty order passed by AO under section 271FA of the Income Tax Act, 1961 directly to the tribunal without filing first appeal before CIT(A).

Analysis:
The appellant filed an appeal directly with the Income Tax Appellate Tribunal against the penalty order passed by the Assessing Officer (AO) under section 271FA of the Income Tax Act for the assessment year 2018-19. The penalty was imposed for non-compliance with the provisions of Section 285BA(1) of the Act. The appellant argued that the penalty was unjust as they had filed the Statement of Financial Transaction (SFT) for the financial year 2017-18 within the specified due date. However, the AO issued notices and show cause notices due to non-compliance, leading to the imposition of a penalty of Rs.4,74,500. The appellant did not file a first appeal before the Commissioner of Income Tax (Appeals) (CIT(A)), the appropriate authority for such appeals arising from penalty orders under section 271FA.

The appellant's representative argued before the tribunal that the SFT was filed on time for the relevant financial year, and thus, there was no non-compliance. The Senior Departmental Representative (DR) contended that the first appeal against the penalty order should have been filed before the CIT(A). The tribunal noted that as per Section 246A(1)(q) of the Income Tax Act, appeals against orders imposing penalties under Chapter XXI should be made to the CIT(A). The tribunal cited a previous case where it was held that the CIT(A) is the designated appellate authority for such penalty orders. The tribunal emphasized that the appellant erred in directly appealing to the tribunal without first approaching the CIT(A).

Referring to previous tribunal decisions, the tribunal highlighted that the CIT(A) is the correct authority for adjudicating first appeals arising from penalty orders under section 271FA. The tribunal set aside the CIT(A)'s orders in previous cases where the appeals were dismissed erroneously. Consequently, the tribunal dismissed the appellant's appeal as non-maintainable and directed them to file the first appeal before the CIT(A) against the penalty order. The tribunal also instructed the CIT(A) to consider any delay in filing the appeal by the appellant. The appeal before the tribunal was dismissed as non-est and not maintainable, emphasizing the correct forum for such appeals as the CIT(A).

In conclusion, the tribunal dismissed the appeal filed directly before it, reiterating that the first appeal against a penalty order under section 271FA should be made before the CIT(A) as per the provisions of the Income Tax Act. The tribunal provided detailed reasoning based on legal provisions and previous tribunal decisions, emphasizing the correct appellate authority for such penalty orders.