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Facts
The appellant filed a revised return of income, admitting additional income and paying taxes, based on figures from the Income Tax TDS Traces portal and advice from a tax representative. The AO levied penalty under section 270A for under-reporting of income.
Held
The Tribunal held that the penalty was wrongly levied. It found that the appellant's mistake in revising the return was bonafide, as he relied on the TDS Traces portal and his tax representative's advice. Full taxes were paid on the additional income.
Key Issues
Whether the penalty levied under Section 270A is justified when the assessee acted bonafidely based on information from official portals and tax representative's advice, and paid the taxes due?
Sections Cited
270A, 80C, 143(3), 270(9)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Mumbai “A” Bench, Mumbai.
Before: Smt. Kavitha Rajagopal (JM) & Shri Omkareshwar Chidara (AM)
1. This is an appeal against the order passed by the Authority under section 270A of the IT Act who has erred in levying penalty of Rs. 498170/-.
2. The Appellant submits that on the facts and circumstances of the case, the said penalty levied be cancelled and relief be allowed.
3. The appellant further crave leave to add, alter or amend the facts and grounds of appeal before and during the appellate proceedings.
The appellant has taken an additional ground of appeal during the appeal hearing and the same is reproduced : “On the facts and circumstances of the case, the order levying penalty u/s 270A(9)(a) for under reporting of income inconsequence of misrepresentation of facts is not a valid order since the same is not in accordance with the law applicable.”
2 Arun Narayan Chavan 3. As some background is required, the facts mentioned in assessment order are anyalysed on the basis of which penalty was levied. From the assessment order for A.Y. 2017-18, it is observed that the Ld. AO made two additions i.e. Rs. 6,56,096/- the difference between original and revised Return of Income and Rs. 1.5 lakhs towards not submitting documentary evidence of provident fund payment for claiming deduction u/s. 80C of the I.T. Act. As there was no response from the appellant, the Ld.AO made two additions while completing the assessment.
Aggrieved by the order of Ld. AO, an appeal was filed by the appellant before the first appellate authority and the Ld. CIT(A) has deleted the addition of Rs. 1.5 lakhs as evidence relating to payment of provident fund was filed before him and the addition relating to Rs. 6,56,096/- was confirmed by Ld. CIT(A).
On this amount confirmed by Ld. CIT(A), there is no further appeal by appellant before the ITAT and hence this addition of Rs. 6,6,096/- remained final and hence penalty was levied by the Ld. AO on this amount. On the amount of Rs. 6.56,096/-, the Ld. CIT(A) confirmed the penalty under section 270A of the Act. Aggrieved by the confirmation of penalty by Ld. CIT(A), the appellant took the above grounds of appeal.
6. Before the Bench, Ld. AR of the appellant has argued as follows : a) Originally, the appellant filed a Return of Income admitting an income of Rs. 41,79,070/- and paid taxes. The TDS of Rs. 11,11,082/- was deducted by employer and hence no further tax was payable. The appellant has inadvertently not included the interest income from bank which is reflected in Form 26AS while filing Return of Income. On noting this bank interest, the appellant paid taxes of Rs. 9,140/- alongwith interest b) Subsequently, the representative who looks after the affairs of appellant saw that part A as generated from TDS Traces site reflected
3 Arun Narayan Chavan total salary of Rs. 36,72,974/- which is different from the salary shown in the Return of Income filed by him. So, the appellant was under bonafide belief that the original Return of Income filed by him is incorrectly filed and the same needs to be revised. Hence, he filed a revised Return of Income declaring an income of Rs. 36,72,974/-. Thus, the appellant revised the Return of Income downwards based on what was reflected in TDS Traces portal of the Income Tax Department. Based on the above revised return of income, the CPC processed the same and a refund of Rs. 2,15,760/- was arrived at. c) Subsequently, the addition of Rs. 6,56,096/- was made under section 143(3) of the Act by the Ld. AO, the appellant accepted the addition and paid the tax on the same and no appeal was filed by the appellant to the ITAT. d) The Ld. AR of the appellant has stated that Ld. CIT(A) has given part- relief to the appellant w.r.t. penalty levied by the Ld. AO, i.e., the Ld. AO was directed to delete the penalty levied on disallowance of section 80C of the Act claim made by the appellant as he filed evidences for payment relating to 80C deduction. Thus, a part of penalty was deleted by Ld. CIT(A) and remaining penalty on the addition of Rs. 6,56,096/- was confirmed. e) On this penalty which was confirmed by Ld. CIT(A), the appellant is in appeal to ITAT and argued that there is neither underreporting nor misreporting by the appellant as he relied on the figures mentioned on the Income Tax Department Portal of TDS Traces and based on the advice of his tax representative and accordingly a revised return was filed. f) Since the mistake was bonafide and immediately after it was brought to his notice, the appellant paid taxes on this additional income added by the Ld. AO. g) The Ld. AR of the appellant has also relied on the detailed paper book filed by him at the time of hearing proceedings. Reliance was placed on 4 Arun Narayan Chavan the Coordinate Bench decision of Saltwater Studio LLP Vs. NFAC 157 taxmann.com749 (Mum-Trib) where the Ld. AO failed to establish how appellant’s case fell within the instances mentioned in the ambit of section 270(9) of the I.T.Act.
Per contra, Ld. DR has argued that the penalty order of Ld. AO and section 250 of the Act of Ld. CIT(A) are quite exhaustive and but for the meticulous examination by the Ld. AO, the appellant could not have admitted the additional income and paid the taxes.
Heard both sides. For the following reasons the penalty levied @ 200% on the suppressed tax of Rs. 2,49,085/- by the Ld. AO under section 270A of the Act is deleted :- a) Ld. CIT(A) has deleted part of the penalty relating to section 80C of the Act and thus there is no misreporting/under reporting on both the additions made by the Ld. AO. b) The appellant is a salaried employee and there is a bonafide mistake on his part as he relied on the advice of his tax representative who filed a revised return based on the figures appearing on Income Tax Portal of TDS Traces. c) Taking a lenient view that (i) it is a bonafide mistake (ii) as he relied on the figures of Income Tax TDS Portal, (iii) followed the advice of tax representative (iv) payment of full taxes was done, the penalty levied by the Ld. AO is deleted.
The appeal of the appellant is allowed.
Order pronounced in the open Court on 28/03/2025.