Substantive compliance overrides procedural requirements: No Penalty u/s 270A for the simple reason that Assessee did not file Form No. 68 but made application on plain paper
Recently ITAT Kolkata in TERAI FRUITS COMPANY VERSUS ITO, WARD-1(1) , SILIGURI, ITA. No 2099/KOL/2024 Dated January 14, 2025 has held that substantive compliance overrides procedural requirements: No Penalty u/s 270A for the simple reason that Assessee did not file Form No. 68 but made application on plain paper.
Let us have a Short Overview of the case:
In this case, the required Form No. 68 was not filed by the Assessee before the Ld. AO which is a condition attached for granting relief from penalty U/s 270AA.
The Ld. CIT(A) confirmed the penalty imposed by the Ld. AO. However, the Ld. CIT(A) has not appreciated the fact that the assessee had substantively complied with the conditions specified u/s 270AA, not contested the assessment order further and had paid the tax. Hence, the Ld. CIT(A) has not considered the fact whether for mere non-filing of Form No. 68 but otherwise making the application on a plain paper for waiver of penalty and fulfilling the substantive conditions, the immunity provided u/s 270AA could be denied to the assessee or not when filing of a Form is only a procedural requirement.
Hon’ble Supreme Court in the case of Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner, [1992 Supp (1) Supreme Court Cases 21) in respect of compliance with the procedural requirements have observed as under:
The mere fact that it is statutory requirements does not matter one way or the other. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve.
Further, the higher amount of penalty for mis-reporting of income is specified as per the provisions of sub-section (9) of section 270A and the Ld. AO has not specified under which clause from (a) to (f) the assessee’s case fell so as to impose the penalty for misreporting of income.
At the most, the case was a case of under reporting of income in the first place.
Sub-section (6) of section 270A also excludes cases of under-reported income where the assessee’s explanation is found to be bona fide. Since the Ld. CIT(A) has gone by the procedural requirement while the assessee had duly complied with the substantive requirement, and neither in the order of the Ld. AO nor in the order of the Ld. CIT(A) a case of mis-reporting of income has been made out and higher amount of penalty has been imposed, hence, in view of the totality of facts and circumstances of the case, it would be in the interest of justice if the order of the Ld. CIT(A) is set aside and the issue is remitted back to the file of Ld. CIT(A) to decide whether filing of Form 68 could be dispensed with and immunity could be granted when the assessee had paid the taxes, not further contested the order of the Ld AO and had applied for immunity from imposing of penalty on plain paper.
He shall also pass a speaking order as to whether it is a case of mis-reporting of income and which of the clauses of section 270A(9) of the Act, if any is attracted for arriving at his decision
The Copy Of the order is as under:
