2024 (11) TMI 811

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....sequently notice u/s 143(2) of the Act was issued to the Assessee, in response to which the Assessee furnished the relevant details as called for by the Assessing Officer (AO). Thereafter a draft assessment order dated 22.09.2021 u/s 143(C)(1) of the Act was passed. Though the Assessee was supposed to file his objection before the Dispute Resolution Panel (Ld. DRP) within 30 days from the receipt of the draft order, however, the Assessee by filing his submission on 12.10.2021 disputed the addition by the AO but did not attach any objection filed before the Ld. DRP. Therefore the AO by considering the fact that 30 days time has already been passed from the service of the draft order, therefore the submission made by the Assessee after passing the draft order cannot be considered and thus the draft order is finalized under the provisions of section 143(C)(3) of the Act. 2.1 On perusing the ITR filed by the Assessee, it was seen by the AO that a sum of Rs. 27,79,510/- has been offered by the Assessee to tax under the head "salaries" whereas as per ITR schedule TDS-details of the tax deducted at source from salary as per Form-16 issued by the Employer, the TDS of Rs. 28,19,510/- was....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....y. Thus it is crystal clear that the amount of Rs. 91,13,252/- is actual "salary accrued" or arisen to the Assessee in India during the year and should have been offered to tax". 2.4 The AO therefore on the aforesaid reason ultimately made the addition of Rs. 62,93,742/- and added the same to the total income of the Assessee under the head "salaries". 2.5 Simultaneously the AO also initiated the penalty proceedings u/s 270A of the Act qua the addition made and consequently issued the notice dated 11.11.2021 u/s 274 r.w.s. 270A of the Act for under reporting of income due to misreporting. Thereafter reminder dated 20.12.2021 was also issued to the Assessee. 2.6 In response to the notice 20.12.2021 u/s 274 r.w.s. 270A of the Act, the Assessee vide letter dated 23.12.2021 mainly claimed that he has not received any show cause notice dated 11.11.2021 and therefore the compliance could not be done for the same. The Assessee further claimed that undisputedly no addition ultimately has been made to his total income; therefore he has not filed any appeal against the assessment order. The Assessee in the later part of the reply further claimed that he inadvertently took the salary ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e grounds of appeal." 5. The additional grounds raised by the Assessee apparently are legal in nature and therefore we are inclined to adjudicate the same before going into the merits of the case. The Assessee by way of additional grounds of appeal has raised two issues, first pertains to the jurisdiction of the AO, second pertains to the notice issued u/s 143(2) of the Act. The Ld. Sr. Advocate Dr. K. Shivaram at the outset claimed that in the instant case a notice dated 11.11.2021 u/s 274 r.w.s. 270A of the Act was issued for under reporting of income u/s 270A(a) with the aid of section 270(A)(e) of the Act, whereas penalty has been levied for misreporting of the income for which admittedly no notice was issued by the AO. The AO in the show cause notice, has also not specified any particular limb/charge and therefore in view of the decision in the case of Jaina Marketing & Associates vs. DCIT (2024) 162 taxmann.com 439 (Delhi-Trib.) passed by the Tribunal, the penalty is not sustainable. The Ld. Senior Counsel also argued on other aspects of the case. 6. On the contrary the Ld. D.R. refuted the contentions raised by the Ld. Counsel by submitting that the defective notice, c....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....en into account the judgment of the co-ordinate Bench of the Tribunal at Mumbai in the case of Saltwater Studio LLP v. NFAC, Delhi (ITA No.13/Mum/2023) dated 22.5.2023, wherein the identical issue as involved in the instant case was also dealt with and ultimately the penalty levied u/s 270A of the Act was deleted by holding as under: "10. The Mumbai Bench of the Tribunal in ITA No. 13/Mum/2023 in the case of Saltwater Studio LLP v. NFAC, Delhi vide order dated 22.5.2023 held as under:- 11. It has to be examined as to whether the action of the AO to have levied penalty under sub-section (9) of section 270A of the Act is legally valid or not. The AO in order to levy the penalty has given the reason for doing so as under:- "The contention of the assessee to drop the penalty proceedings is rejected because the assessee has clearly misreported its income by an amount of Rs. 3,94,996/- as per the provisions of the Section 270(A)(9) of the Act. And a misreported income leads to evasion of Tax. Hence, it is clearly established that the assessee has committed an intentionally fault under the provisions of the Section 270(A)(9) of the Act by under reporting its inc....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ed on record dated 02/06/2021, it is evident that the Ld. AO had show caused the assessee as to why the assessee should not be imposed with penalty for 'under reporting of income'. The assessee had filed its submissions stating that he had not 'under reported its income' We are unable to comprehend ourselves to accept to the argument of the Ld. DR that assessee did not make any submissions with regard to 'mis reporting of income'. The assessee could be expected to give reply only in respect of show cause notice that is put to him. Why at all the assessee should infer/ assume/presume that the Ld. AO having recorded satisfaction in the quantum assessment order that offence of both 'under reporting' and 'mis reporting' is committed by the assessee and accordingly the penalty would be levied on the assessee for both in terms of section 270A(9) of the Act? 16. It is well settled that penalty proceedings and assessment proceedings are separate and distinct. Reliance in this regard is placed on the decision of Hon'ble Supreme Court in the case of Anantharam Veera Singhaiah & Co. Vs. CIT (1980) 123 ITR 457 (SC) wherein it was held that f....