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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGH, HON’BLE & SHRI MANJUNATHA. G, HON’BLE
आदेश /O R D E R
PER MANJUNATHA. G, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 21.02.2023 and pertains to assessment year 2017-18.
The brief facts of the case are that, the assessee filed her return of income on 31.03.2018, declaring total income of Rs.
:-2-: ITA. No: 418/Chny/2023 50,10,040/- and said return has been revised on 11.09.2018, declaring total income of Rs. 51,78,140/-. The case was selected for scrutiny and during the course of assessment proceedings, the AO noticed that the assessee has adopted annual value of house property at Rs. 5,40,000/-, instead of Rs. 8,40,000/- in the revised return filed for the relevant assessment year and therefore, called upon the assessee to explain as to why difference should not be added under the head income from house property. In response, the assessee submitted that the Accountant who filed the return has adopted incorrect figure while computing annual value of house property and thus, requested the AO to consider the difference amount as income of the assessee under the head income from house property. The assessee had also accepted interest income at Rs. 8,000/- under the head income from business. The AO, after considering relevant submissions of the assessee completed assessment u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) on 16.11.2019 and made additions of Rs. 3,08,000/- towards annual value of house property for Rs. 3,00,000/- and interest income under the head income from other source for Rs. 8,000/-. Thereafter, the AO initiated penalty proceedings u/s. :-3-: ITA. No: 418/Chny/2023 270A of the Act for under-reporting of income and after considering submissions of the assessee levied penalty of Rs. 1,92,192/- for under-reporting of income by misreporting of its income. The assessee carried the matter in appeal before the first appellant authority, but could not succeed. The ld. CIT(A), for the reasons stated in their appellant order dated 21.2.2023 sustained penalty levied by the AO u/s. 270A of the Act.
The ld. Counsel for the assessee submitted that the assessee being a senior citizen aged 81 years, engaged Accountant for filing his return of income and submitted all details. The Accountant who filed return of income by inadvertent error disclosed annual value of the house property at Rs. 5,40,000/- instead of Rs. 8,40,000/-. In respect of interest income, the assessee on bonafide belief declared interest income under the head income from business. However, when the AO noticed above mistakes, he has fairly agreed and paid taxes on annual value of the house property and also accepted assessment of interest income under the head other sources. Therefore, it cannot be said that the :-4-: ITA. No: 418/Chny/2023 assessee has under reported his income by misreporting income which warrants penalty u/s. 270A of the Act.
The ld. DR, supporting the order of the ld. CIT(A) submitted that as per the provisions of section 270A of the Act, if assessed income is more than the amount of returned income, then penalty is leviable u/s. 270A of the Act. In case the assessee accepted additional income, then it can avail immunity provided u/s. 270AA of the Act. Since, the assessee has misreported his income, the AO has rightly levied penalty and their order should be upheld.
We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The AO levied penalty u/s. 270A of the Act, for under reporting of income in respect of annual value of house property and interest income assessed under the head income from other source. The assessee has filed original return of income, where it has declared annual value of house property at Rs. 5,40,000/-. The assessee had also offered interest income under the head income from business. The said
:-5-: ITA. No: 418/Chny/2023 mistake has been continued in revised return filed for relevant assessment year. However, during assessment proceedings when the AO noticed said lapse, the assessee admitted the mistake and offered Rs. 8,40,000/- under the head income from house property towards annual value of house property. The assessee had also accepted assessment of interest income under the head income from other source. During penalty proceedings, the assessee explained before the AO that said mistake is on account of inadvertent error committed by an Accountant. We find that, if you go through income on which the AO levied penalty u/s. 270A of the Act, on annual value of house property, the Accountant who filed return of income has committed inadvertent error and reported only ALV of Rs. 5,40,000/- instead of Rs. 8,40,000/- and in our considered view said mistake cannot be considered as under reporting of income for levying of penalty u/s. 270A of the Act. In respect of assessment of interest income under the head business, instead of income from other source, the assessee fairly agreed that he was on a bonafide belief that said income is assessable under the head income from business. In our considered view, when the assessee has explained that there is a bonafied mistake in offering interest income under the :-6-: ITA. No: 418/Chny/2023 head income from business and also there is no difference in tax when it was offered under the head income from other source and income from business, in our considered view, there is no reason for the AO to levy penalty u/s. 270A of the Act, for under reporting of income. Thus, we delete penalty levied u/s. 270A of the Act towards under reporting of income in respect of annual value of house property and also assessment of interest income under the head income from other sources.
In the result, appeal filed by the assessee is allowed.