Case Details: Alrameez Construction (P.) Ltd. v. CIT/NFAC, Delhi - [2023] 152 taxmann.com 382 (Mumbai-Trib.)
Judiciary and Counsel Details
- Kuldip Singh, Judicial Member & Gagan Goyal, Accountant Member
- Manoj Kumar Sinha, Sr. AR for the Respondent.
Facts of the Case
The assessee-company filed its return of income for the relevant assessment year and the case was selected for scrutiny. During the scrutiny proceedings, the Assessing Officer (AO) made an addition under section 43CA read with section 56(2)(x). By virtue of this addition, penalty proceedings under section 270A were initiated on account of misreporting of income.
The appeal of the assessee in quantum had been disposed of by the Commissioner (Appeals) against the assessee. Thereafter, the order of penalty under section 270A was finalized and penalty was imposed without waiting for the outcome of quantum appeal.
The matter reached Mumbai Tribunal.
ITAT Held
The Tribunal held that Section 270A deals with deeming income only in the case of additions made in section 115JB i.e. MAT provisions. In the instant case, additions were made by virtue of section 43CA read with section 56(2)(x) i.e. deeming provisions. In case of applicability of deeming provisions, there is no option provided in the statute except to make adjustments as per the figures derived from deeming sections vis-a-vis figures disclosed by the assessee.
In that situation, the case of the assessee does not fall in the category of under-reporting of the income. In the cases where deeming provisions applied for addition of income neither concealment of income nor under-reporting of income can be established against the assessee as there is no active participation of the assessee can be established in doing so.
Penalty initiated and imposed under section 270A for misreporting of income is not only erroneous but also arbitrary and bereft of any reason as in the penalty notice the revenue has failed to specify the limb “under-reporting” or “misreporting” of income, under which the penalty proceedings had been initiated. There was not even a whisper as to which limb of section 270A was attracted and how section 270A(9) was satisfied.
In the absence of such particulars, the mere reference to the word “misreporting” by the revenue in the assessment order, for imposition of penalty makes the impugned order manifestly arbitrary. Therefore, no penalty can be imposed in this case, as there was no misreporting by assessee for the purposes of section 270A.
List of Cases Reviewed
- Jaibalaji Business Corporation (P.) Ltd. v. Asstt. CIT [2023] 147 taxmann.com 333/200 ITD 58 (Pune – Trib.) (para 6) followed.
List of Cases Referred to
- Jaibalaji Business Corporation (P.) Ltd. v. Asstt. CIT [2023] 147 taxmann.com 333/200 ITD 58 (Pune – Trib.) (para 7).
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