2022 (12) TMI 1071 - AT - Income Tax

Maintainability of appeal before ITAT - Commissioner (Appeals) need to be approached first - as pointed this appeal is filed against the penalty order u/s 270A of the Income Tax Act, 1961, passed by the AO directly before us whereas the assessee ought to have approached Commissioner (Appeals) first - assessee, submits that Section 246A, which lists out the appealable orders before the CIT(A) does not refer to an order passed by the Assessing Officer under section 270A, whereas Section 253(1)(a), which sets out provisions for appeals before the Income Tax Appellate Tribunal, does specifically refer to the orders passed under section 270A.HELD THAT - The objection taken by the learned Departmental Representative is indeed correct. Section 246A(1)(q) specifically includes, in orders appealable before the learned Commissioner (Appeals), an order imposing a penalty under chapter XXI , and chapter XXI of the Income Tax Act, 1961 covers Sections 270 to 275- Section 270A, dealing with underreporting and misreporting of income, is thus covered by the said provision. Clearly, therefore, the appeal against an order imposing penalty under section 270A, as passed by the AO, is appealable before the Commissioner (A). As for the reference to the order passed under section 270A being appealable before this Tribunal, u/s 253(1)(a), is specifically with reference to such orders being passed by the Commissioner (Appeals), and that is the limited extent to which general provisions of the Section 246A(1)(q) must make way for the specific provisions of the Section 253(1)(a). The order sought to be impugned in this appeal is passed by the AO and, therefore, this exception does not come into play. Learned counsel s understanding of the legal position, even if bonafide- particularly considering his young age and limited experience, is clearly incorrect. The appeal filed before us is thus indeed not maintainable in law. Thus learned counsel to file the appeal, alongwith condonation petition setting out the requisite details resulting in the delay in filing of appeal before the CIT(A), as soon as possible now, and it is for the learned CIT(A) to take a call thereon in accordance with the law, by way of a speaking order and after giving a due and reasonable opportunity to the assessee.

Summary

Issues:
1. Jurisdiction of filing appeal under section 270A of the Income Tax Act, 1961 directly before the Income Tax Appellate Tribunal without approaching the Commissioner (Appeals) first.

Analysis:
The appeal in question was filed against a penalty order under section 270A of the Income Tax Act, 1961, directly before the Income Tax Appellate Tribunal. The Departmental Representative pointed out that the appellant should have approached the Commissioner (Appeals) first. The appellant's counsel argued that Section 246A does not mention orders passed under section 270A as appealable before the Commissioner (Appeals), while Section 253(1)(a) specifically refers to such orders before the Tribunal. However, it was clarified that Section 246A(1)(q) includes orders imposing penalties under chapter XXI, covering sections 270 to 275, which includes section 270A. Therefore, the appeal against a penalty order under section 270A should have been filed before the Commissioner (Appeals) first.

The Tribunal explained that the appealable orders under section 253(1)(a) refer to orders passed by the Commissioner (Appeals) and not the Assessing Officer. The appellant's misunderstanding, although genuine due to limited experience, was deemed incorrect. The Tribunal concluded that the appeal filed directly before them was not maintainable in law. The appellant's counsel requested to file the appeal before the Commissioner (Appeals) and assured that the error was made in good faith without prejudice to the assessee's interests.

The Tribunal directed the appellant's counsel to file the appeal before the Commissioner (Appeals) with a condonation petition explaining the delay. It emphasized that the Commissioner (Appeals) should decide on the matter in accordance with the law and provide a reasonable opportunity to the assessee. As there was no cause for immediate interference by the Tribunal, the appeal was dismissed as non-maintainable. The Tribunal left the matter for the Commissioner (Appeals) to address further.

In conclusion, the Tribunal clarified the correct jurisdiction for filing appeals under section 270A, highlighting the necessity to follow the proper legal procedures and hierarchy in tax matters to ensure fair and lawful proceedings.