DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(4), KOLKATA , KOLKATA V. ADARSH HEIGHTS PVT LTD, KOLKATA

ITA 1949/KOL/2024

AI Insights

The case involves Adarsh Heights Pvt. Ltd., which was penalized by the Assessing Officer (AO) under section 270A of the Income Tax Act, 1961, for underreporting income due to certain disallowances made in the assessment year 2018-19. The penalties were based on additions made for disallowed interest and depreciation. The CIT(A) later deleted these additions, leading to the deletion of the penalty. The Revenue appealed against this decision, but the Tribunal found no grounds to sustain the penalty as the basis for it (the quantum additions) had been removed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 46751 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Assessment record; Notional interest
• Section: 143(3); 250

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'सी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘C’ BENCH, KOLKATA श्री संजय शमाा, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI SONJOY SARMA, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 1949/KOL/2024 Assessment Year: 2018-19 DCIT, Central Circle-1(4), Kolkata Vs. Adarsh Heights Pvt. Ltd. (Appellant) (Respondent) PAN: AAJCA3954F Appearances: Department represented by : Archana Gupta, Addl. CIT, Sr. DR. Assessee represented by : None. Date of concluding the hearing : February 12th, 2025 Date of pronouncing the order : February 21st, 2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the Revenue is against the order of the Commissioner of Income Tax (Appeals)-20, Kolkata [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2018-19 dated 28.05.2024, which has been passed against the penalty order u/s 270A of the Act, dated 22.03.2022. None appeared on behalf of the assessee and the case was heard with the assistance of the Ld. Sr. DR. Page | 2 I.T.A. No.: 1949/KOL/2024 Assessment Year: 2018-19 Adarsh Heights Pvt. Ltd. 1.1. The Registry has informed that the appeal filed by the assessee is barred by limitation by 51 days. An application seeking condonation of delay for 45 days has been filed by the assessee for condoning the delay stating as follows: “1. The appellant/petitioner states that being aggrieved by and dissatisfied with the impugned order of the Ld. CIT(A)-20/11265/2017-18 the A/Y. 2018-19 in the case of Adarsh Heights, an appeal has been preferred before this Hon’ble IT AT, Kolkata under section 253 of the IT Act 1961. 2. The appellant/petitioner states that the impugned order passed by the Ld. CIT(A)-20, Kolkata on 28.05.2024 was received by the Office of the Pr. Commissioner of Income Tax Central-1, Kolkata on 28.05.2024. Your petition states that according to the Income Tax Department, the last date of filing the appeal expired on 28.07.2024, 3. Your petitioner states that there are sufficient reasons/causes for condonation the delay in filing the Appeal under Section 253 of the Income Tax Act 1961 which are as follows:- 4. After receiving the said impugned order and upon completion of the due departmental procedure, the Income Tax Office (Tech.), Pr. CIT Central-1, Kolkata dated 25.06.2024 requested the Dy. Commissioner of Income Tax Central Circle-1(4), Kolkata to prepare Appeal Scrutiny Report (ASR) and to send the same to the Pr. Commissioner of Income Tax, Central-1, Kolkata along with the Assessment records in order to examine the issue of filing appeal under Section 253 of the IT Act 1961 and this office received the same on 25.06.2024 and ASR was submitted by this office on 19.07.2024. 5. The ASR is submitted by the Office of the Addl. Commissioner of Income Tax Central, Range-1, Kolkata on 19.07.2024 for onward transmission to the office of the Pr. CIT Central-1, Kolkata for his kind perusal and taking necessary action. 6. The office of the Pr. Commissioner of Income Tax, Central-1, Kolkata on 06.09.2024 vide letter No. Pr. CIT©-l/Tech/Kol./ASR/Tech./2024-25/5665 dated 06.09.2024 accorded his kind approval for filing 2nd appeal under section 253 before the Hon’ble ITAT, Kolkata. The details procedure are furnished below:- 1. Calling for ASR by Ld. Pr. CIT Central-1, Kolkata office letter dated 25.06.2024 2. Letter received by the AO 25.06.2024 Page | 3 I.T.A. No.: 1949/KOL/2024 Assessment Year: 2018-19 Adarsh Heights Pvt. Ltd. 3. ASR furnished by AO before the Addl. CIT Central Range-1, Kolkata 19.07.2024 4. Addl. CIT furnished to the O/o. Pr. CIT Central-1, Kolkata 26.07.2024 8 Pr. CIT Central-1, Kolkata approval received 06.09.2024 7. In the aforesaid facts and circumstances the appellant/petition most humbly submits that due to unavoidable situation and circumstances, which were beyond the control of your petitioner, there is a delay in filing the instant appeal. It is humbly requested that such delay is unintentional and such delay may kindly be condoned by the Hon’ble ITAT, Kolkata and the instant appeal may be heard and the appeal be registered. 8. Your petition states that the last date to file this appeal was 28.07.2024 and as such, there is a total delay of 45 days in filing the instant appeal. 9. This application is made bonafide and for the interest of justice. Under the above facts and circumstances the appellant/petitioner most humbly prays that your Lordship may graciously be pleased to pass the following orders a. Delay 45 days in preferring the instant appeal be condoned and the aforesaid appeal be registered and restored to file and be heard on merit. b. Such other or further order or orders and/or direction or directions be given as this Hon’ble ITAT may be deem fit and proper. And for the act of kindness your petition as in duty bound shall ever pray.” 1.2. Considering the condonation application and the reasons stated therein, we are satisfied that the Ld. AO had a reasonable and sufficient cause and was prevented from filing the instant appeal within statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication on merits. 2. The revenue is in appeal before the Bench raising the following grounds of appeal: “1. That on the facts and circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the penalty imposed by AO of Rs. 84,83,453/- u/s. 270A of the Income Tax Act, 1961 on account of notional interest on unsecured loan. Page | 4 I.T.A. No.: 1949/KOL/2024 Assessment Year: 2018-19 Adarsh Heights Pvt. Ltd. 2. That the appellant reserves its rights to substantiate, modify, delete supplement and/or alter the grounds at any time of the appeal proceedings.” 3. Brief facts of the case are that Aggrieved with the penalty order, the assessee filed an appeal before the Ld. CIT(A) who allowed the appeal of the assessee deleting the penalty u/s 270A of the Act. Aggrieved with the appeal order, the Revenue filed an appeal before the Tribunal. The finding of the Ld. CIT(A) is as under: “The appellant has filed appeal against the order of the A.O. in levying the penalty of Rs.90,37,276/- U/S.270A of the Act. It has filed this appeal after a delay of 250 days of passing the penalty order dated 22-03-2022. The appellant has mentioned the reason for delayed receipt of order of penalty and demand notice on 28-11-2022 and subsequently, filing of appeal on 30- 11-2022 as under: “Your honour would appreciate to understand that the notices and orders were sent to the old email id and that was not in our possession. Hence your appellant could not get any notice and order and remained non-complied. When the letter for recovery of demand was received then we came to know about the penalty order was passed u/s 270A. Hence there was delay attributed without any malafide intention and knowledge. Your honor is requested to condone the delay and admit the present appeal and oblige us.” Considering the merit in the submission of the appellant that the reasons being the late receipt of penalty order and demand notice in delayed filing of appeal in this case. Hence, the delay of 250 days in filing the appeal is condoned and the appeal is admitted for adjudication on merit. The appellant has raised four grounds of appeal against the levy of penalty of Rs.90,37,276/- u/s.270A of the Act, 1961. The A.O. has levied the penalty in this case stating that addition of Rs.5,10,82,386/- as disallowance interest and of 35,84,617/- (Rs.27,13,591/- & Rs.8,71,026/- ) as disallowance of depreciation were made to the total income of the assessee in the assessment order passed on 27-08-2021 u/s. 143(3) of the Act, 1961. Hence, penalty proceeding u/s.270A of the Act was initiated for under reporting the income. As per A.O., since the appellant assessee did not comply to show cause notice issued U/S.274/270A of the Act, the A.O. levied the penalty @50% of the tax sought to be evaded u/s.270A of the Act. Page | 5 I.T.A. No.: 1949/KOL/2024 Assessment Year: 2018-19 Adarsh Heights Pvt. Ltd. However, the assessee had filed appeal against the assessment order of the A.O. on 27-08-2021, where both the additions made by the A.O. were challenged. In the appeal, the appellant has got full relief on both the additions. The addition made by disallowance of depreciation of Rs.35,84,617/- and disallowance of interest of Rs.5,10,82,386/-were deleted by CIT(A). As such the quantum additions of Rs.5,46,67,003/- on the basis on which penalty u/s.270A of the Act was imposed is deleted by the CIT(A) in its appeal order dated 17-05-2024. Hence, the penalty levied on the addition deleted in appeal will not sustain in the eyes of law. Therefore, in view of the above the penalty levied of Rs.90,37,276/- by the A.O. u/s.270A of the Act, is hereby deleted.” 4. In the course of appeal, the Ld. Sr. DR was fair enough to inform the Bench that the quantum addition in this case has been deleted and therefore, the penalty u/s 270A of the Act is not liable to be sustained. 5. Since the quantum addition has been deleted, therefore, there is neither any under reported income nor any under reported income in consequence of any misreporting and therefore, penalty u/s 270A of the Act is not liable to be imposed and the order of the Ld. CIT(A) deleting the penalty is hereby upheld and the appeal of the revenue is dismissed. 6. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open Court on 21st February, 2025. Sd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 21.02.2025 Bidhan (P.S.) Page | 6 I.T.A. No.: 1949/KOL/2024 Assessment Year: 2018-19 Adarsh Heights Pvt. Ltd. Copy of the order forwarded to: 1. DCIT, Central Circle-1(4), Kolkata 2. Adarsh Heights Pvt. Ltd., 7th Floor Culmohar Building, 6C Middleton Street, Kolkata -700071. 3. CIT(A)-20, Kolkata. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "