NEW DAWATH TRADERS,THANJAVUR V. ITO, WARD 1 KUMBAKONAM, KUMBAKONAM

ITA 2717/CHNY/2024

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The case involves New Dawath Traders, a firm engaged in wholesale rice trade, which appealed against the penalty levied by the Income Tax Officer (ITO) under section 270A for under-reporting income in the Assessment Year 2017-18. The firm had initially reported an income of Rs. 6,52,740, which was later assessed at Rs. 25,46,812 after a survey and subsequent tax declarations under the PMGKY scheme. The ITO imposed a penalty for not filing Form 68, claiming the firm did not meet the conditions for immunity from penalty under section 270AA. The Tribunal, however, found that the firm had met the conditions and that the technical non-compliance with Form 68 filing did not warrant the imposition of a penalty.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107499 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Other Referred Cases: Pankaj Bhai Rameshbhai Zalavadiya v. Jethabhai Kalabhai Zalavadiya
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITHA
• Assessee Lawyers: N. ARJUN RAJ
• Section: 270AA

Judgement Text

"आयकर अपीलीय अिधकरण, ’सी’ \u0001यायपीठ, चे\tई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI \u0001ी एबी टी. वक , \u000bाियक सद\u0011 एवं एवं एवं एवं \u0001ी जगदीश, लेखा सद\f क े सम\u0015 BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2717/Chny/2024 िनधा\u000eरणवष\u000e/Assessment Year: 2017-18 New Dawath Traders, No.17, Chakkarapani South Street, Kumbakonam, Thanjavur-612 001. v. The ITO, Ward-1, Kumbakonam. [PAN: AAFFN 4855 R] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) अपीलाथ\u0016 क\u001a ओर से/ Appellant by : Mr.N. Arjun Raj, Advocate \u0017\u0018यथ\u0016 क\u001a ओर से /Respondent by : Ms.Anitha, Addl.CIT सुनवाईक\u001aतारीख/Date of Hearing : 09.01.2025 घोषणाक\u001aतारीख /Date of Pronouncement : 14.02.2025 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-18, (hereinafter referred to as “the Ld.CIT(A)”), Chennai, dated 24.09.2024 for the Assessment Year (hereinafter referred to as \"AY”) 2017-18. 2. The main grievance of the assessee is against the action of the Ld.CIT(A) confirming the action of the penalty levied u/s.270A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) to the tune of Rs.2,72,549/- for under reporting of income to the tune of Rs.48,94,072/- ITA No.2717/Chny/2024 (AY 2017-18) New Dawath Traders :: 2 :: 3. The brief facts are that the assessee firm is engaged in the business of wholesale rice trade in the name and style of M/s. Dawath Traders and filed its return of income (RoI) on 30.10.2017 for AY 2017-18 disclosing total income at Rs.6,52,740/-. Later, the premises of the assessee was surveyed u/s.133A of the Act on 17.03.2017 and based on the survey findings, the return was selected for scrutiny and the AO assessed total income at Rs.55,46,812/- and since, the assessee has offered Rs.30 lakhs under PMGKY Scheme, net-assessed income came down to Rs.25,46,812/-. Pursuant to the assessment order dated 30.12.2019, assessee remitted the tax computed at Rs.8,70,297/- within 30 days of the demand, and didn’t file any appeal against the assessment order dated 30.12.2019. Thus, assessee claimed that it was eligible/entitled for immunity from imposition of penalty u/s.270AA of the Act. However, the AO didn’t agree, because assessee didn’t file Form 68 before him, within the period stipulated under sub-section (2) of section 270AA of the Act, hence, he issued notice u/s.270A of the Act; and despite having taken note of the assessee’s assertion that it had paid tax & interest as per the assessment order u/s.143(3) of the Act dated 30.12.2019 [within the period specified in the notice of demand] and preferred no appeal against the assessment order, still the AO levied penalty u/s.270A of the Act, alleging assessee’s failure to explain on merits against disallowance/addition made in the assessment order and has imposed ITA No.2717/Chny/2024 (AY 2017-18) New Dawath Traders :: 3 :: penalty u/s.270A of the Act for under-reporting of income by levying penalty of Rs.2,72,549/- u/s.270A of the Act @50% of the amount of tax payable on under-reported income. On appeal, the Ld.CIT(A) has inter- alia confirmed the action of the AO by observing that immunity [from levy of penalty u/s.270A of the Act] could have been granted only if the assessee had filed Form 68 within one month from the end of the month in which the assessment order has been received; and in the absence of it, he rejected the claim of immunity and also observed that the assessee didn’t bring any evidence to show that the assessee’s case would fall under the ken of Rule 6DD of the Income Tax Rules, 1962 to exclude the transaction from violation of sec.40A(3) of the Act which led to the disallowance of Rs.47,64,072/-. 4. Aggrieved by the aforesaid action of the Ld.CIT(A), the assessee is in appeal before this Tribunal. 5. We have heard both the parties and perused the material available on record. We note that the assessee-firm filed its RoI admitting total income at Rs.6,52,740/- on 30.10.2017. Pursuant to survey on 17.03.2017, u/s.133A of the Act, the return was selected for scrutiny and the AO made an addition of Rs.55,46,812/- and since, the assessee offered Rs.30 lakhs under PMGKY scheme, the net-assessed income was computed at Rs.25,46,812/-. Pursuant thereto, assessee paid tax & ITA No.2717/Chny/2024 (AY 2017-18) New Dawath Traders :: 4 :: interest within the period/time given in the assessment order/demand notice and thus it is an undisputed fact that the assessee has fulfilled conditions prescribed u/s.270AA of the Act for claiming immunity from imposition of penalty u/s.270A of the Act by duly remitting the tax & interest as per the order of the assessment as well as didn’t file any appeal against the assessment order dated 30.12.2019. Thus, it is noted that the assessee has fulfilled the conditions under Clause (a) & Clause (b) of sub-section (1) of section 270AA of the Act. However, the assessee didn’t file before the AO the application for immunity in Form 68 as prescribed by sub-section (2) of section 270AA of the Act. In case, if the assessee had filed Form 68 within the prescribed period stated in sub- section (2), [i.e. within one month from the end of the month in which the assessment order was received by assessee] then the AO should have granted immunity from imposition of penalty u/s.270A of the Act. At the cost of repetition, it is noted that the assessee has fulfilled both the conditions for grant of immunity as stipulated under clause (a) & (b) of sub-section (1) of section 270AA of the Act, which are substantive in nature except didn’t file Form 68 before AO. Therefore, in substance assessee was entitled for claiming immunity from imposition of penalty u/s.270A of the Act. In this context, it has to be kept in mind that courts are meant to do substantial justice between the parties, and that technical rules or procedure should not be given precedence over doing ITA No.2717/Chny/2024 (AY 2017-18) New Dawath Traders :: 5 :: substantial justice. Undoubtedly, justice according to the law, doesn’t merely mean technical justice, but means that law is to be administered to advance justice [refer the decision dated 30.10.2017 of the Hon’ble Supreme Court in the case of Pankaj Bhai Rameshbhai Zalavadiya v. Jethabhai Kalabhai Zalavadiya in Civil Appeal No.155549 of 2017]. In the given factual background, according to us, non-filing of Form 68 is only a technical or venial breach which should not snatch away the substantive right to claim immunity from levy of penalty, which assessee got vested with on fulfillment of substantive conditions mandated in Clause (a) & (b) of sub-section (1) of section u/s.270AA of the Act. Be that as it may be, it has been further brought to our notice that assessee has filed Form 68 [a copy of which is found placed at Page Nos.1-3 of the Paper Book which has been uploaded in the IT portal]. Hence, considering the overall facts in this case, we are of the view that no penalty ought to have been levied u/s.270A of the Act for under-reporting of income and therefore, we direct deletion of the same. 6. In the result, appeal filed by the assessee is allowed. Order pronounced on the 14th day of February, 2025, in Chennai. Sd/- Sd/- (जगदीश) (JAGADISH) लेखा सद\f/ACCOUNTANT MEMBER (एबी टी. वक ) (ABY T. VARKEY) \u0001याियक सद\bय/JUDICIAL MEMBER ITA No.2717/Chny/2024 (AY 2017-18) New Dawath Traders :: 6 :: चे\tई/Chennai, !दनांक/Dated: 14th February, 2025. TLN, Sr.PS आदेश क\u001a \u0017ितिलिप अ$ेिषत/Copy to: 1. अपीलाथ\u0010/Appellant 2. \u0011\u0012थ\u0010/Respondent 3. आयकरआयु\u0018/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u0011ितिनिध/DR 5. गाड फाईल/GF "