Case Law Details
Karimnagar District Cooperative Central Bank Limited Vs ITO (ITAT Hyderabad)
The case involves Karimnagar District Cooperative Central Bank Ltd. (DCCB) appealing against the penalty levied under Section 270A of the Income Tax Act for the assessment year 2018-19. Initially, the bank had declared an income of ₹9.50 crore and paid the necessary taxes. However, during the assessment, it realized an excess gratuity provision of ₹16.19 lakh, which was voluntarily offered for taxation. The assessing officer accepted the addition and later imposed a penalty of ₹5.60 lakh, rejecting the bank’s request for immunity under Section 270AA. The bank contended that it had complied with all statutory conditions, including paying the tax demand of ₹9.94 lakh within one month. However, the Commissioner of Income Tax (Appeals) dismissed the appeal, citing the failure to upload tax payment details on time.
Upon appeal, ITAT Hyderabad reviewed the evidence, noting that the bank had indeed paid the required tax within the stipulated period. Referring to a prior judgment (Punam Kumar Bhati Vs. ITO), ITAT ruled that a delay in submitting the physical proof of tax payment should not lead to a denial of immunity under Section 270AA(3). Consequently, the tribunal allowed the appeal, setting aside the penalty order. This ruling reinforces the principle that procedural lapses should not override substantive compliance when taxpayers fulfill their legal obligations in good faith.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
Present appeal of the assessee is arising from the order of the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”) dated 10.05.2024 and relates to assessment year 2018-19.
2. There is a delay of 14 days in filing the present appeal before the Tribunal. Explaining the reasons for the delay, the learned counsel for the assessee pointed out that the Principal Officer, who is the authorized signatory for the litigation work of Income Tax department of the assessee bank was out of town, that is why there is a delay of 14 days in filing the present appeal. The learned counsel for the assessee has also drawn the attention of the Bench towards the affidavit filed by the Principal Officer of the assessee bank. The Ld. DR could not seriously object to the prayer for condonation of delay. Considering the smallness of the delay and the facts of the case, we hereby condone the delay and proceed to adjudicate the matter.
2. Facts leading to filing of the present appeal are that the assessee is a cooperative bank carrying on banking business and had filed its return of income declaring an income of 9,50,67,410/- and paid the taxes thereon. The case was selected for scrutiny and during the course of assessment proceedings, the assessee had realized that they have not added back the amount of excess provision made over the actual amount of gratuity provided during the year and had immediately offered the differential amount of Rs.16,19,486 to tax. The assessing officer had completed the assessment making an addition to the tune of the agreed amount of Rs.16,19,486/- and no other item of addition was required. The assessee had duly deposited the demand raised in the assessment to the tune of Rs.9,94,024/- within a period of one month and had also responded to the Notice issued under section 270A with a plea under sec.270AA for grant of immunity against the penalty proposed, considering the fulfilment of conditions enumerated under section 270AA. The Ld. Assessing Officer went on to ignore the plea submitted on 03.09.2021 with all the details. After completing the assessment, the Ld. Assessing Officer levied a penalty of Rs.5,60,470/- u/s 270A of the Act vide order dated 06/09/2021.
3. Aggrieved with the order of the Assessing Officer levying penalty, the assessee preferred appeal before the Ld. CIT(A) on 05/10/2021 and assailed the order of the Ld. Assessing Officer, contending that the Assessing Officer ought to have granted immunity to the assessee as per the provisions of section 270AA(3) of the Act. However, Ld. CIT(A) could not find any force in the argument of the assessee and dismissed the appeal of the assessee only on the ground that the assessee has not uploaded the details of paying tax upto October, 2021.
4. At the outset, the learned counsel for the assessee before us pointed out that the assessee has deposited the tax as computed by the Assessing Officer within one month from the date of assessment and hence, merely because the assessee has provided the hard copy of Form 68 on a later date would not debar the assessee from getting immunity from section 270AA of the Act.
5. Ld. DR relied on the order of the authorities below.
6. After considering the rival submissions, we observe that page no.8 of the compilation filed by the assessee would prove beyond doubt that the assessee had paid taxes on 20.03.2021 i.e., within one month from the date of assessment order. We further observe that section 270AA(3) would provide immunity to such assessees who deposits the amount of tax within one month and could not file appeal against the assessment order would get immunity from the penalty u/s 270A. The assessee has relied on the judgement of Punam Kumar Bhati Vs ITO reported in [2024] 165 Taxmann.com 286 (Jodhpur-Trib), wherein, under similar facts, the ITAT has held that mere delay in submitting the physical copy of the challan as proof of deposit of tax would not be sufficient to deny immunity provided under section 270AA(3). Respectfully following the judgement of Jodhpur Bench (supra), we allow the appeal of the assessee.
7. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on this the 20th day of September, 2024.
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