Loading judgment…
Facts
The assessee claimed deduction under Section 80IA for wind mill power generation. The Assessing Officer (AO) disallowed the deduction as it exceeded the 10-year period allowed from the initial year mentioned in Form-10CCB. The AO also levied penalty under Section 270A for misreporting income, which was confirmed by the CIT(A).
Held
The Tribunal held that penalty proceedings are separate from assessment proceedings. It found that the assessee had made the claim based on a Form-10CCB certified by a chartered accountant, and the initial year was correctly stated. Therefore, the case did not fall under misreporting as per Section 270A(9)(a).
Key Issues
Whether penalty under Section 270A for alleged misreporting of income is sustainable when the claim was based on a CA-certified form and there was no evidence of deliberate intention to evade tax.
Sections Cited
80IA, 270A, 143(1), 139(5), 270A(9), 270A(9)(a), 273B, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid two appeals filed by the assessee for Assessment Years (AYs) 2018-19 & 2020-21 arises out of the identical orders of Learned Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi [hereinafter “CIT(A)”] dated 06.06.202.
The facts in both the appeals of the assessee are identical and issues are common hence, we proceed to pass a common order. For & 2080/Chny/2024 :- 2 -:
2019-20 as lead case. The grounds of appeal raised by the assessee for A.Y 2018-19 are as under:
1. “1) The Impugned Order is unfair, excessive, unwarranted and liable to be quashed. 2) The Assessing Officer and the Learned Commissioner (Appeals) erred in not entertaining and considering the bona fide explanation on the part of the Appellant for not rectifying the mistake made in filing the return of income, until it was pointed out by the Department in the Assessment Proceeding. 3) Without prejudice, the Assessing Officer and the Learned Commissioner (Appeals) erred in not considering that the Appellant did not file any appeal against the Assessment Order and immediately paid the respective demand, thereby showing that the mistaken claim was only due to inadvertence and without any intent to obtain an undue benefit. 4) Without prejudice, the Learned Commissioner (Appeals) erred in not considering that the invocation of the provisions of Section 270A(9) is unwarranted, given that the Appellant did not have the opportunity to reverse the same, considering that Intimation under Section 143(1) was issued after the time limit to file return under Section 139(5) and that even when the Intimation was issued, the same did not point out this discrepancy in its claim and that the same was followed by Covid-19 Pandemic. 5) Without prejudice, the Learned Commissioner (Appeals) and the Assessing Officer erred in not considering that the invocation of Section 270A(9)(a) is not justified and proper, as there was no "suppression of facts" or "misrepresentation" made by the Appellant before the Assessing Officer and the demand raised was duly paid. 6) Without prejudice, the Learned Commissioner (Appeals) and the Assessing Officer erred in turning a blind eye to the provisions of Section 273B of the Act, considering the unique circumstances of the instant case.”
The effective ground of appeal is against confirming the order of A.O in levying penalty u/s. 270A of the Act for misreporting of income.
& 2080/Chny/2024 :- 3 -:
The assessee has filed return of income on 29.10.2018 by declaring total income of Rs. 4,63,430/-. The return of income was processed u/s 143(1) on 28.04.2020. The assessee has claimed deduction of Rs. 36,55,963/- u/s. 80IA of the Act in the return of income on generating power by wind mills. The A.O has disallowed the claim of deduction, as the initial year of assessment in Form- 10CCB filled by the assessee was mentioned as 27.03.2007 and therefore 10 consecutive years from the initial year has already elapsed. The A.O has also penalty u/s. 270A of the Act for misreporting of the income on the above disallowances as assessee has accepted the disallowances. Aggrieved, the assessee filed an appeal before the Ld. CIT(A). On appeal, the Ld. CIT(A) has confirmed the penalty.
The Ld. Authorized Representative (A.R) of the assessee has argued that A.O has levied penalty u/s 270A(9)(a), though there is neither misrepresentation nor suppression of facts as assessee has claimed deduction u/s. 80IA of the Act on the basis of Form-10CCB issued by the CA and all material facts including the initial year of undertaking was correctly stated. The Ld. AR also argued that the claim has been accepted u/s. 143(1) of the Act, reinforcing the & 2080/Chny/2024 :- 4 -: assessee’s reasonable belief that the deduction was allowable. The Ld AR relied on the decision of Hon’ble Supreme Court in the case of Waterhouse Coopers Pvt. Ltd. vs. CIT 348 ITR 306 (SC), wherein it was held that a bonafide mistake based on professional advice does not amount to concealment or misreporting warranting a penalty.
On the other hand, the Ld. Departmental Representative (DR) supported the orders of lower authorities, and submitted that Section 80IA(4) of the Act clearly limits the deduction to ten consecutive assessment years. Since, the assessee has claimed deduction beyond this period, it constituted a clear violation of statutory provisions. The Ld. DR therefore, argued that penalty u/s. 270A was justified, as the assessee had misreported its income by making an ineligible claim.
We have heard the rival submissions, and perused the materials available on record. The A.O has levied penalty u/s 270A for misreporting of income on the charge of misrepresentation or suppression of facts in respect claim of deduction u/s. 80IA of the Act.
The LD AR has explained that the claim was made on the basis of report in Form-10CCB certified by the C.A, wherein all material facts including initial year of generating power was correctly stated as 2006- 07 and therefore there was no misrepresentation or suppression of & 2080/Chny/2024 :- 5 -: facts .The LD AR has also relied on the decision of Hon’ble Supreme Court in the case of Waterhouse Coopers Pvt. Ltd. vs. CIT, in support of his contention.
7.1 It is settled principal of law that penalty proceedings are separate and distinct from assessment proceedings and merely because a claim has been disallowed and assessee has accepted the disallowances in itself would not attract penalty u/s 270A of the Act.
The Hon’ble Bombay High Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158 (Bom.), in context of penalty u/s 271(1)(c) of the Act has held that merely making an incorrect claim does not tantamount to furnish inaccurate particulars of income unless there is evidence of a deliberate intention to evade tax.
7.2 We note that the assessee has made the claim u/s 80IA on the basis of Form 10CCB , duly certified by the chartered accountant . The fact of initial year was correctly stated in the Form-10CCB. We therefore are of the considered opinion that assessee’s case does not fall under misreporting u/s. 270A(9)(a) of the Act. Consequently, penalty levied u/s. 270A of the Act is not sustainable as per law. In view of the above, the appeal filed by the assessee is allowed.
& 2080/Chny/2024 :- 6 -:
We find that the identical issue is involved in assessee’s appeal for A.Y 2020-21 also and accordingly, our adjudication above in A.Y 2018-19 applies mutatis mutandis to this appeal as well. Therefore, for the similar reasons, the appeal in is also allowed.
In the result, both the appeals filed by the assessee are allowed.
Order pronounced on 19th March, 2025.