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TMI Blog2025 (2) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... see : Shri Nikhil Pathak For the Revenue : Shri Arvind Desai, Addl. CIT-DR ORDER PER RAMA KANTA PANDA, V.P. : This appeal filed by the assessee is directed against the order dated 26.08.2024 of the Ld. CIT(A)-NFAC, relating to assessment year 2017-2018. Although number of grounds have been raised by the assessee, however, the same relates to the order of the Ld. CIT(A) in confirming levy of penalty at Rs. 3,19,534/- u/sec.270A of the Income Tax Act, 1961 (in short "the Act"). 2. Facts of the case, in brief, are that the assessee is a partnership firm engaged in the business of builder and developer. It filed it's return of income on 31.03.2018 declaring Rs. NIL total income. The case was selected for scrutiny under CASS for the reason 'introduction of large capital during the year of incorporation'. Accordingly, statutory notices u/sec.143(2) and 142(1) were issued and served on the assessee, in response to which, the Authorised Representative of the Assessee appeared before the Assessing Officer from time to time and filed the requisite details. 2.1. During the course of assessment proceedings, the Assessing Officer noted that assessee has debited advertisement exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med as a deduction in the year under consideration, the question of levy of penalty u/s 270A simply did not arise. 6) The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal." 5. Learned Counsel for the Assessee, at the outset, referring to the copy of the notice issued u/sec.274 r.w.s.270A of the Act dated 02.12.2019 submitted that the Assessing Officer has not mentioned as to under which Clause of sec.270A of the Act the penalty proceeding has been initiated. Referring to the decision of the Coordinate Bench of the Tribunal in the case of Sagar Subhash Wedhane, Nashi vs. ITO, Nashik vide ITA.No.191/ PUN./2024 dated 03.07.2024 and in case of Smita Virendra Lodha, Ahmednagar vs. ITO, Ward-1, Ahmednagar vide ITA.No.1980/PUN./2024 dated 12.11.2024, he submitted that under identical circumstances, the Coordinate Benches of the Tribunal have cancelled the penalty on account of failure of the Assessing Officer for non-mentioning as to under which clause/limb of Sec.270A such penalty proceedings have been initiated. 5.1. Even on merit also, he submitted that assessee is justified in capitalization of such expenditure and all the details were filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Kishor Digambar Patil vs. ITO vide ITA.Nos.54 & 55/PUN./2023 dated 30.03.2023 has cancelled such penalty by observing as under: "10. We have heard the rival arguments made by both the sides and perused the orders of the Assessing Officer and Ld. CIT(A)/NFAC. We find the Assessing Officer completed the assessment u/s 147 r.w.s. 144B of the Act on a total income of Rs. 18,74,800/- which was the income returned by the assessee in response to the notice u/s 148 of the Act. We find the Assessing Officer levied the penalty of Rs. 6,37,912/- u/s 270A of the Act on account of under-reporting of income in consequence of mis-reporting. We find the Ld. CIT(A) /NFAC upheld the action of the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee, that the penalty notice issued by the Assessing Officer is silent about the clause under which the assessee has underreported or mis-reported the income. 11. We find some force in the above arguments of the Ld. Counsel for the assessee. We find the Co-ordinate Bench of the Tribunal in the case of Kishor Digambar Patil vs. ITO (supra) while decidin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t;Sec.270A(8) - Notwithstanding anything contained in subsection (6) or sub-section (7) where under-reported income is in consequence of any misreporting thereof by any person, the penalty referred to in sub-section (1) shall be equal to two hundred per cent of the amount of tax payable on underreported income." 5.1. Mr. Murkunde lastly sought to buttress the point that section 270A(8) nowhere makes it mandatory to include any of the clause "(a) to (f)" provided in sub-section (9) thereof. He further submitted that various judicial precedents quoted at the assessee's behest in the preceding paragraphs are no more applicable once the legislature has amended the penalty provision Le.. sec.271 itself. 6. I have given my thoughtful consideration to the vehement rival stands and find no merit in the Revenue's arguments. It is made clear that the assessee's case law indeed relates to the earlier penalty provision i.e., sec.271(1)(c) of the Act only wherein various hon'ble higher judicial forums had settled the law that the Assessing Officer ought to specify as to whether the concerned taxpayer had concealed or furnished inaccurate particulars of his tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in books of account; (iii) claiming of expenditure not substantiated by evidence; (iv) recording of false entry in books of account; (v) failure to record any receipt in hooks of account having a bearing on total income: (vi) failure to report any International transaction or deemed international transaction under Chapter X of the Income tax Act." 6.2. Faced with the situation and in light of overwhelming material strongly supporting the assessee's case and going by stricter interpretation as per Commissioner of Customs (Imports). Mumbai vs. Dilipkumar And Co. & Ors. 2018 (9) SCC 1 (SC) (FB). I am of the view that the above stated judicial precedents regarding the "limb theory" would squarely apply even in case of failure of the Assessing Officer to quote any of the six sub-limbs as well prescribed in sec.270A(9) (a) to (f) of the Act introduced by the legislature in order "to rationalize and bring objectivity, certainty and clarity in the penalty provisions" And that his noncompliance to this clinching effect would not only defeat the legislative mandate but also it renders the amending provisions an otiose. I accordingly hold in these peculi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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