Appeal Against Order of National Faceless Appeal Centre

17 Feb, 2024

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An appeal has been filed against the order dated 31-08-2023, passed by the National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2020-21. The grounds of appeal are as follows:

The appellant contends that the order passed by lower authorities is bad in law and must be quashed.
The NFAC allegedly erred in law and on facts by confirming a penalty of Rs. 11,39,816, disregarding the appellant's submissions.
The NFAC allegedly erred in law and on facts by failing to consider the appellant's argument that their case falls under section 270A(6) of the Act.
The NFAC allegedly erred in law and on facts by imposing a penalty without recording proper satisfaction.
The NFAC allegedly erred in law and on facts by confirming the action of the Assessing Officer for the invocation of section 270A(9) of the Act.

The background of the case reveals that the assessee filed their return of income for the assessment year 2020-21 on 11-12-2020, declaring a total income of Rs. 5,49,75,980. Subsequently, the case was selected for scrutiny assessment, and an order was passed on 29-09-2022, determining the total assessed income to be Rs. 5,63,08,997, with an addition of Rs. 13,33,313. The Assessing Officer initiated penalty proceedings for mis-reporting of income and under-reporting of income, issuing a show cause notice on 03-08-2022. As the assessee did not respond, a penalty of Rs. 11,39,860 was imposed under section 270A of the Act.

Aggrieved by the penalty order, the assessee filed an appeal before the CIT(A), which was subsequently dismissed.

During the proceedings, the appellant argued that the expenditure was duly noted in the books of accounts and audit report, which were submitted during the assessment proceedings. They claimed deductions under various sections of the Act and provided supporting documentation. The appellant contended that there was no mis-reporting or under-reporting of income.

On the other hand, the Departmental Representative (D.R.) argued that the appellant had not claimed the proper expenditure as required by law, constituting mis-reporting and under-reporting.

After hearing both parties and examining the relevant materials, it was observed that the appellant had provided comprehensive details and explanations regarding the expenses, establishing a nexus between the interest expenses and income earned. The appellant had also demonstrated the genuineness, identity, and creditworthiness of parties involved. Consequently, it was concluded that the penalty imposed was unjustified.