TaxTMI 
TaxTMI 
2024 (12) TMI 1552
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 21.06.2021 determining the total income of the assessee at Rs. 23,84,93,182/-. Subsequently, the case was selected for complete scrutiny under CASS to examine the following issues: (i) Default in TDS (ii) Default in TDS & Disallowance for such default (iii) Refund claim (iv) Unsecured loan 2.1. Accordingly, the Assessing Officer issued statutory notices u/sec. 143(2) and 142(1) of the I.T. Act, 1961, in response to which, the Authorised Representative of the Assessee appeared before the Assessing Officer from time to time and filed the requisite details. The Assessing Officer completed the assessment determining the total income of the assessee at Rs. 32,18,44,630/- by estimating the income from contract work at 10% of the turnover as against 7.37% declared by the assessee, which the assessee accepted and paid the due taxes. 2.2. Subsequently, the Assessing Officer initiated penalty proceedings u/sec. 270A of the Act. Before the Assessing Officer assessee submitted that penalty u/sec. 270A is not leviable as the case of the assessee company is covered by exclusion mentioned in sec. 270A(6)(a) of the Act. It was submitted that d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en the income is estimated. 3.1. It was further argued by the assessee that the Assessing Officer has levied the penalty without giving details of exact clause of mis-reporting of income under which he wanted to charge the assessee company. Since the Assessing Officer has failed to mention both in the assessment order as well as in the notice issued u/sec. 274 r.w.s. 270A of the Act as to under which limb/sub-clause of sec. 270A(9) of the Act penalty proceedings are initiated, penalty so levied is not in accordance with law. The assessee also relied on various decisions to the proposition that penalty is not leviable in absence of non-communication of the exact limb from clause (a) to (g) of sub-section (2) of section 270A or as to which of the specific clause (a) to (f) of sub-section (9) of section 270A was detriment before imposing the impugned penalty u/sec. 270A of the Act in the assessment order or in the notice u/sec. 274 r.w.s. 270A of the Act. 3.2. Based on the arguments advanced by the assessee, the Ld. CIT (A) cancelled the penalty so levied by observing as under : "Finding : 5.2. I have considered the submission of the appellant and the facts of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sions of section 115JB or section 115JC, as the case may be, is greater than the deemed total income determined in the return processed under clause (a) of sub-section (1) of section 143; (e) the amount of deemed total income assessed as per the provisions of section 115JB or section 115JC is greater than the maximum amount not chargeable to tax, where no return of income has been filed; (f) the amount of deemed total income reassessed as per the provisions of section 115JB or section 115JC, as the case may be, is greater than the deemed total Income assessed or reassessed Immediately before such reassessment; (g) the Income assessed or reassessed has the effect of reducing the loss or converting such loss into income. (3) The amount of under-reported income shall be.- (i) in a case where income has been assessed for the first time, - (a) if return has been furnished, the difference between the amount of income assessed and the amount of income determined under clause (a) of sub-section (1) of section 143; (b) in a case where no return has been furnished,- (A) the amount of income assessed, in the case of a com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, in the assessment of such person in any year prior to the assessment year in which such receipt, deposit or investment appears (hereinafter referred to as "preceding year") and no penalty was levied for such preceding year, then, the under-reported income shall include such amount as is sufficient to cover such receipt, deposit or investment. (5) The amount referred to in sub-section (4) shall be deemed to be amount of income under-reported for the preceding year in the following order- (a) the preceding year immediately before the year in which the receipt, deposit or investment appears, being the first preceding year, and (b) where the amount added or deducted in the first preceding year is not sufficient to cover the receipt, deposit or investment, the year immediately preceding the first preceding year and so on. (6) The under-reported income, for the purposes of this section, shall not include the following, namely:- (a) the amount of income in respect of which the assessee offers an explanation and the Assessing Officer or the Commissioner (Appeals) or the Commissioner or the Principal Commissioner, as the case may be, is satisf....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... provisions of Chapter X apply. (10) The tax payable in respect of the under-reported income shall be - (a) where no return of income has been furnished and the income has been assessed for the first time, the amount of tax calculated on the under-reported income as increased by the maximum amount not chargeable to tax as if it were the total income; (b) where the total income determined under clause (a) of sub-section (1) of section 143 or assessed, reassessed or recomputed in a preceding order is a loss, the amount of tax calculated on the under-reported income as if it were the total income; (c) in any other case determined in accordance with the formula- (X-Y) where, X = the amount of tax calculated on the under-reported income as increased by the total income determined under clause (a) of sub-section (1) of section 143 or total income assessed, reassessed or recomputed in a preceding order as if it were the total income; and Y = the amount of tax calculated on the total income determined under clause (a) of sub-section (1) of section 143 or total income assessed, reassessed or recomputed in a preceding or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....above judicial authorities relied upon by the appellant, 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 seven sub-limbs as well prescribed in Section 270A(9) (a) to (g) 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 peculiar facts and circumstances that the impugned penalty notice issued by the Ld. AO deserves to be quashed as not sustainable in the eye of law. In view of the above, penalty levied u/s 270A of the Act is bad in law. Hence, the AO is directed to delete the impugned penalty. The additional ground raised by the appellant is, therefore, allowed. 5.6. As the ground No. 4 of appeal has been allowed, therefore, the grounds no.1 to 3 of the appeal become academic in nature and do not require separate adjudication." 3.3. Since the Ld. CIT (A) has cancelled the pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the assessee in the instant case has declared a profit rate of 7.37% on the contract receipts. The Assessing Officer rejecting the various explanations given by the assessee, resorted to the provisions of sec. 145(3) and estimated the income @ 10%, on which, the assessee paid the taxes. He submitted that neither in the assessment order nor in the notice issued u/sec. 274, the Assessing Officer has mentioned the exact limb of sec. 270A(9) under which penalty was imposed and, therefore, the penalty proceedings so initiated by the Assessing Officer are not in accordance with law. For the above proposition, the Learned Counsel for the Assessee relied upon the following decisions : 1. Sagar S. Wedhane v. ITO [ITA No. 191/PUNE/2024] dated 03.07.2024. 2. ACIT v. Kedari Redekar Shikshan Sanstha [ITA No. 559/PUNE/2024] dated 05.07.2024. 3. Shivaji Sonawane v. ITO [ITA No. 708/PUNE/2023] dated 02.02.2024. 4. Annasaheb Gunjal v. ITO [ITA No. 182/PUNE/2024] dated 21.10.2024. 5. Kasat Prakash M. HUF v. ITO [ITA No. 1328/PUNE/2023] dated 19.06.2024. 6. Ritu Multitrade Services Pvt. Ltd. v. ITO [(2024) 164 taxmann.co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed it's income, the Ld. CIT (A) deleted the penalty. The detailed reasoning given by him has already been reproduced in the preceding paragraphs. 7.1. We do not find any infirmity in the order of the Ld. CIT (A) in deleting the penalty so levied by the Assessing Officer. It is an admitted fact that the Assessing Officer in the assessment order has not specified as to under which limb of provisions of sec. 270A(2) or 270A(9), the assessee has misreported or under-reported it's income, we find the Assessing Officer in the body of the assessment order has mentioned as under after making the addition : "In light of the above, the amount of Rs. 8,33,51,480/- is added to the total income of the assessee company for A.Y. 2020-21. Penalty proceedings u/s 270A of the Income Tax Act, 1961 is initiated separately for underreporting in consequence of mis-reporting of income." 7.1. Similarly, we find the notice issued u/sec. 274 r.w.s. 270A dated 30.09.20222, copy of which, is placed at page-12 of the paper book, reads as under : 7.2. Similarly, the second notice issued u/sec. 270A dated 05.01.2023 reads as under : 7.3. We find the Hon'ble Delhi High Court in the case ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....btained fresh loans of Rs. 1,42,54,268/- from bank during AY 2018-19. Accordingly, since the assessee has pleaded that fresh loan has been obtained for capital expenditure on assets which has been claimed as capital expenditure in the ITR and now assessee submits request to reduce its claim of capital expenditure for the assets on which loan has been taken in next years. According to the Ld. AO, the plea of the assessee is found acceptable. Not only this the Ld. AO went on to observe further that in this way, the assessee had saved itself from the double deduction on same capital assets on which loan is availed in coming years whose repayment may have been claimed by the assessee in subsequent AYs. It was in the above backdrop of the factual matrix that the Ld. AO disallowed the excess claim of capital expenditure of Rs. 1,42,54,268/-. In our considered view there is no intentional misrepresentation of expenditure as alleged. By no stretch of imagination it can be said to be a case of attempted tax evasion as even after revision of computation, the taxable income remained Nil which is same as returned income of the assessee. In the assessment order there is no whisper tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....forgoing legal issue raised in the instant appeal that the impugned penalty proceedings stand vitiated on account of the Assessing Officer's failure to pinpoint the relevant clauses (a) to (f) to sub-section (9); while initiating the proceedings herein u/s. 270A(8) of the Act, thereby alleging under reporting of income as a sequence of misreporting. Faced with this situation, we find no merit in Revenue's arguments placing reliance on M/s. Veena Estate Pvt. Ltd. (supra) once the issue before their lordships was that of the concerned appellant seeking to frame an additional substantial question of law in section 260A proceedings whereas the law regarding the tribunal's jurisdiction to entertain such a pure question of law, not requiring any further detailed investigation on facts, is already settled in NTPC Ltd. Vs. CIT (1998) 229 ITR 383 (SC). That being the case, we are of the considered view that going by the foregoing judicial precedent, this tribunal is very much entitled to entertain and decide such a pure legal plea for the first time in section 254(1) proceedings. We accordingly reject the Revenue's instant technical arguments to conclude in light of section ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the order of Ld. CIT (A) which did not lay down the ratio that specific limb of section 270A must be mentioned for a valid order u/s 270A. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in holding that the notice u/s. 270A r.w.s. 274 was invalid as it did not mention the specific clause of Section 270A whereas there is no such requirement mandated by law. 5. The appellant craves leave to add, alter, modify, delete and amend any of the grounds, as per the circumstances of the case." 10. After hearing both the sides, we find that grounds raised in the instant appeal are identical to grounds raised in ITA. No. 1939/PUN./2024. We have already decided the issue and the grounds raised by the Revenue have been dismissed. Following similar reasoning, the grounds raised by the Revenue in the instant appeal are dismissed. 11. In the result, both the appeals of the Revenue are dismissed. A copy of this common order be placed in the respective case files. Order pronounced in the open Court on 26.12.2024. ============= Document 1 Income Tax Department GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT 5....