Form No. 68 Could Not Be Uploaded Due To Error; Mumbai ITAT Directs AO To Redecide On Application For Immunity From Penalty U/s 270AA

The Mumbai ITAT also directed the assessee to provide the evidences of filing of form number 68, which could not be uploaded due to the error.

The Bench of the ITAT comprising of Vikas Awasthy (Judicial Member) and Prashant Maharishi (Accountant Member) observed that, “No doubt, that assessee has complied with provisions of subsection (1) of section 270AA of the act. However, assessee has not made such an application in form number 68 as provided according to rule 129 within one month from the end of the month in which the order referred to was received. However, the assessment order was passed on 7/4/2021, the assessee on 26/4/2021 has categorically stated that he has complied with the provisions of section 270AA (1) of the act. Even in filing form number 68 the error report received was produced before the lower authorities.” (Para 9)

The Bench further added that, “according to provisions of 270AA (4) assessing officer shall pass an order accepting or rejecting the application of the assessee for granting of immunity after giving an assessee and opportunity of hearing. In this case, no such opportunity was provided to the assessee.” (Para 9)

As per the brief facts of the case, the assessee was issued notice u/s 142 (1). It was noted that assessee has claimed exemption u/s 54F. The assessee was asked to produce the copies of the sale deed and purchase deed of the properties as well as purchase deed of new asset to substantiate the claim of the deduction u/s 54F. During examination, it was found that assessee owns two residential house properties and has offered rental income in his return. Therefore, in terms of section 54F the assessee is not entitled for the above exemption. The AO denied the exemption holding that assessee owns more than one residential house other than the new asset on the date of transfer of the original asset and therefore is not entitled to deduction/exemption u/s 54F. Thus, the addition was made. It was further held that assessee has misreported his income u/s 270A (1) read with subsection 9 (1) and therefore penalty proceedings u/s 270A (1) and subsection 9 (a) was initiated.

The AO held that assessee has not filed a formal application for immunity from levy of penalty in the prescribed form number 68 before the AO as per the provisions of section 270AA within the time limit and therefore assessee is not entitled to the immunity. AO further served to him notices but assessee did not respond. Therefore, AO held that assessee has underreported as income which is in consequence of misreporting and levied penalty u/s 270A (9) by order u/s 270A.

The CIT (A) held that immunity can be granted only if the appellant made an application within one month from the end of the month in which the order passed by the AO is received by the assessee. The assessee did not fulfill the condition for claiming exemption u/s 54F findings of the AO that the appellant has underreported his income consequence of misreporting and the penalty has been rightly levied u/s 270A (9).

The Bench noted that assessee has accepted the addition and did not file any appeal and assessee has also paid the due tax thereon.

The Bench observed that assessee submitted before the AO within one month of the assessment order that he would like to apply for immunity from the penalty by applying the provisions of section 270AA as he has paid the complete tax and does not want to pursue the addition in further appeal.

The Bench further observed that instead of considering the contention of assessee, the AO levied penalty u/s 270A.

The Bench also observed that before the CIT(A) assessee has given a reason why he could not file form number 68 in time but intimated to the AO about the immunity provision and complying with those conditions in time. He referred that, that period was Covid 19 second phase and further he also produced before the CIT(A) about the error report in filing form number 68.

Therefore, on finding that no opportunity of hearing was provided to the assessee before rejecting application for immunity, ITAT allowed assessee's appeal for statistical purposes.

Counsel for Appellant/Taxpayer: Mandar Vaidya

Counsel for Respondent/Department: H.M. Bhatt

Case Title: Prathamesh Vivek Khot verses Income Tax Officer

Case Number: ITA No. 2602/Mum/2023

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