STIC TRAVELS PVT LTD,DELHI vs. INCOME TAX DEPARTMENT, DELHI

Brief facts are that the assessee filed its return for A.Y. 2020-21 on 30.12.2020 declaring loss of Rs. 16941039/-. The case was selected for complete scrutiny. During the course of scrutiny proceedings, the assessee filed a revised computation of income disallowing the expenses of Rs. 34,58,379/- on account of loss on sale of assets and Rs. 1,26,526/- on account of charity and donation u/s 37 of the Act. Accordingly, the total loss was revised at Rs. 1,35,08,670/-. Vide order dated 26.04.2022 u/s 143(3) of the Act, assessment was completed at this revised loss of Rs. 1,35,08,670/-. However, the AO initiated penalty proceedings u/s 270A of the Act for under-reporting of income in consequence of misreporting in respect of disallowances as above. Subsequently, penalty of Rs. 18,04,496/- computed @ 200% of tax sought to be evaded was imposed vide order dated 28.10.2022, on the ground that if the case was not selected for scrutiny, these expenses wrongly claimed would not be detected and therefore, the assessee was held to be in default in view of provisions of Section 270A of the Act. 2

Before us, the Ld. AR submitted that the revised computation of income was filed suo motu without any adverse observation from the Assessing Officer (AO). It was further explained that, due to inadvertent errors on account of a technical glitch in the software utility, certain details were omitted / entered in wrong columns. It was only after the case was selected for scrutiny that the assessee noticed the mistake and, accordingly, filed a revised computation of income, since it was not possible to file a revised return for which the time limit had expired. Since the mistake was inadvertent, bona fide, and was rectified suo motu by the assessee, no penalty should have been levied in the facts and circumstances of the case.

On the other hand, the Ld. DR has argued as per the section of 270A of the Act, there has been failure on the part of the assessee to correctly report his income in the original return and, if the case has not been selected for scrutiny, no revised computation would have been filed. Hence, in the facts and circumstances of the case, levy of penalty u/s 270A is justified and deserved to the upheld.

We have heard the rival submissions and perused the material available on record. We are of the considered view that the explanation given by the assessee is bonafide and the Ld. DR has not been able to demonstrate that the revised computation was filed in response to the mistake / omission having been detected by the Department. As such, we 3

In the result, appeal of the assessee is allowed.