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Facts
The assessee, a cooperative society, initially declared 'Nil' income by claiming deduction under Section 80P. The Assessing Officer (AO) disallowed sums under Section 40(a)(ia), Section 80G, and Section 80P(2)(d), determining a higher income and imposing a penalty under Section 270A for under-reporting/misreporting. The CIT(A) deleted the penalty, noting a bona fide explanation and that the primary disallowance under Section 80P was a debatable issue and had been deleted in the quantum appeal.
Held
The Tribunal upheld the CIT(A)'s decision to delete the penalty, finding no under-reported income or misreporting within the meaning of Section 270A. It observed that the major disallowance concerning Section 80P was debatable and had already been deleted in the quantum appeal, thereby negating the basis for the penalty.
Key Issues
Whether the CIT(A) was justified in deleting the penalty imposed under Section 270A for alleged under-reporting or misreporting of income, particularly in light of the debatable nature of the Section 80P deduction and the assessee's bona fide explanation.
Sections Cited
250, 270A, 80P, 80P(4), 143(2), 142(1), 143(3), 144B, 40(a)(ia), 80G, 80P(2)(d), 274, 270AA, 43CA, 56(2)(x), 115JB, 115JC, 148, 92D, 271AAB
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Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: SHRI PRADIP KUMAR CHOUBEY & SHRI RAKESH MISHRA
order
: April 29th, 2025 ORDER
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the Revenue is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2020-21 dated 02.07.2024, 6.5 Hon'ble ITAT, Mumbai Bench in the case of Alrameez Construction (P.) Ltd. Vs NFAC (2023) (152 taxmann.com 382) (Mumbai Trib.) has held that where Assessing Officer made addition under section 43CA read with section 56(2) (x), case of assessee did not fall in category of under reporting of income and moreover since in penalty notice under section 270A revenue had failed to specify limb "under-reporting" or "misreporting" of income, under which penalty proceedings had been initiated, entire proceeding was not only erroneous but also arbitrary and bereft of any reason. ……………………………………… ……………………………………… 7. In view of the facts and circumstances of the case, and the prevailing position of law, I find that this is a not a case of under-reporting or misreporting of income, within the meaning of section 270A of the Act. The alleged under-reporting by way of making an incorrect claim in law, was purely a result of oversight, for which a bonafide explanation was offered by the appellant. This is not a case of misrepresentation or suppression of facts, as all the relevant and material facts were already on record. Therefore, the action of AO in levying penalty of Rs. 1,43,036/- under section 270A at the rate of 50 percent of tax payable on under-reported income is not sustained. Further, the action of AO in levying penalty of Rs. 1,00,18,578/- under section 270A at the rate of 200 percent of tax payable on under-reporting in consequence of misreported income is also not sustained, as the related disallowance of deduction under section 80P has itself been deleted in appeal. Accordingly, the Jurisdictional Assessing Officer (JAO) is directed to delete the aggregate penalty of Rs. 1,01,61,614/- levied under section 270A, on these accounts. These grounds of appeal
are allowed.
8. In Ground No. (4), the appellant has sought leave to add, substitute, modify, delete or amend or to raise additional grounds of appeal. No such option has been exercised by the appellant during the appeal proceedings and hence, this ground does not require any adjudication.
9. In the result, the appeal is allowed.”
4. Aggrieved with the order of the Ld. CIT(A), the Revenue has filed the appeal before this Tribunal.