CREATIVE ASHTECH POWER PROJECTS PVT. LTD.,MUMBAI vs. DCIT, CIRCLE-14(1)(2), MUMBAI

In the subsequent appeal before the ld.CIT(A), it was contented by the assessee that the impugned sum was not disclosed as income for the relevant year on account of inadvertent mistake and there was no deliberate act on its part. Rather, it was a bonafide mistake for which it was not liable to penalty for misreporting of income. However, the ld.CIT(A) rejected the explanation of the assessee holding that misinterpretation of the law does not give the assessee immunity from the repercussions of breaking it. It is clear that the assessee made a wrong claim of deduction in its P & L account, despite being such a big concern and without any doubt, many consultants at its disposal. In such a scenario, the claim of the assessee that it was bonafide mistake

Before us, the ld.DR has relied on the orders of the authorities below stating that the assessee made deliberate misreporting of income which came to light only because the assessment order was passed after due scrutiny or else would have gone unnoticed. Moreover, the assessee being a reasonably big corporate entity having on its rolls many tax consultants and advisors ,such a blatant mistake could not be considered as bonafide but is intentional act on its part. He further placed reliance on the coordinate bench decisions in the case of Sanjeev Kumar Manchand Rajpoot(2023) 157 taxmann.com 747(Pune) and IBS Software 158 taxmann.com 209(Ker) stating to be directly applicable to the facts of the case where also the impugned penalty pertained top section 270A of the Act.

The ld.AR has argued that the AO has invoked a wrong section in holding the assessee guilty in terms of section 270A(9)(e) of the Act which states failure to record any receipt in books of account having a bearing on total income which is not applicable to the facts of the case as the assessee has duly recorded the impugned sum in its books of account. The ld.AR on the other hand has mainly placed reliance on the decision of Pune ITAT on Popat Karbhari Bhalerao 165 taxmann.com 291 in support of the ground that application of wrong section 270A(9)(e) made the penalty non maintainable. However, we find that the said decision is not squarely applicable to the facts of the present case where the ld.CIT(A) has rectified the mistake of invoking clause(e) in place of clause(a) to section 270A(9) of the Act exercising his plenary powers which was not the case in the cited decision.

We have carefully considered all relevant facts of the case. It would be appropriate to have a look at the penalty provisions u/s 270A(9) of the Act which reads as under:

1 It is evident that the assessee has not shown above income from Foreign Exchange gains in the return filled u/s 139(1) of the Act. It is also true that the assessee did not file any further quantum appeal and accepted the addition made by the AO. However, this does not absolve the assessee from penalty liability if the income disclosed in the return was previously undisclosed or underreported. The Hon'ble Supreme Court in the case of Mak Data P. Ltd. Vs. CIT [2013] 358 ITR 593 (SC) has observed that it is trite law that voluntary disclosure does not release the assessee from the mischief of penal proceedings and the law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty.

2 We do not find any infirmity in the order of ld.CIT(A) in holding that the present case is covered by the provisions of section 270A(9)(a) instead of clause(e) of section 270A(9) of the Act which was incorrectly applied by the AO. The impugned amount clearly involved misreporting of income referred to in clause (a) being

3 It is well-settled that powers of ld.CIT(A) are co- terminus with powers of the Assessing Officer. Useful reference may be made to order of Apex Court decision in CIT vs. Kanpur Coal Syndicate 53 ITR 225 (SC) in which it was held that the first appellate authority, the CIT(A) in the case before us, has plenary powers in disposing off an appeal; that the scope of his power is co-terminus with that of the ITO; that he can do what the ITO can do and also direct him to do what he failed to do. The hon'ble Dattatreya [2011] 197 taxman 151 has held that "as a revisional authority Commissioner Appeals can revise not only the ultimate computation arrived at but every process which led to the ultimate computation or assessment".The Hon'ble Kerala High Court in the case of V. Subramonia Aiyr vs. CIT [1978] 113 ITR 685 held that "the power conferred on Appellate Authority by Section 246 which is exercised in accordance with procedure with Section 250 indicate the amplitude and width which is no less wide than that of an ITO and the P a g e | 8 A.Y. 2017-18 Creative Ashtech Power Projects Private Limited Appellate Authority could substitute the order of the ITO by one of his own."

4 In the case of Jute Corporation of India Ltd. vs. Commissioner of Income-tax and another reported in 187 ITR 688 the hon’ble Supreme Court noted with approval observation of the Court in the case of CIT vs. Kanpur Coal Syndicate(supra) to the effect that " The Appellate Assistant Commissioner, therefore, has plenary powers in disposing of appeal. The scope of his power is co-terminus with that of the Income Tax Officer. He can do what the Income Tax Officer can do and also direct him to do what he has failed to do." It was observed that there was no reason why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income Tax Officer. The Act does not place any restriction or limitation on the exercise of appellate power. It was observed that:-

5 In so far as the reliance placed by the ld.AR on the decision of Pune ITAT on Popat Karbhari Bhalerao 165 taxmann.com 291 is concerned, in support of the ground that application of wrong section 270A(9)(e) made the penalty non maintainable, we find that the said decision is not applicable to the facts of the present case where the ld.CIT(A) has rectified the mistake of the AO in invoking clause(e) in place of clause(a) to section 270A(9) of the Act exercising his plenary powers which was not the case in the cited decision.

6 In light of the above discussion, we conclude that the order passed by the ld.CIT(A) does not suffer from any infirmity and is therefore, upheld. Thus, the appeal filed by the assessee is dismissed.

In the result, the appeal is dismissed.