PRASHANT BALASAHEB KAGE,NASHIK vs. INCOME TAX OFFICER, NASHIK

Facts of the case, in brief, are that the assessee is an individual salaried employee filed return of income for the assessment year 2017-18 declaring taxable income of Rs.4,05,650/- after claiming various deductions of Rs.2,42,420/- under Chapter VI-A. The Assessing Officer, on the basis of information received from the Income Tax Officer, (Investigation) Nashik, that the assessee has claimed excess deductions, initiated proceeding u/s 147 of the IT Act after obtaining approval from the authorities & accordingly, a notice u/s 148 was issued. The assessee furnished return of income in response to notice u/s 148 of the IT Act, declaring taxable income of Rs.7,24,000/- after claiming deductions under Chapter VI-A. The assessment was completed u/s 147 r.w.s. 144B of the IT Act on 21.09.2021 by accepting the income returned in response to notice 148 of the IT Act. Subsequently, vide order dated 15.03.2022 the Assessing Officer imposed penalty of Rs.1,08,470/- u/s 270A(8) of the IT Act for underreporting of income in consequence of misreporting.

After considering the reply of the assessee, Ld. CIT(A)/NFAC dismissed the appeal and confirmed the penalty of Rs.1,08,470/- imposed u/s 270A(8) of the IT Act. It is this order against which the assessee is in appeal before this Tribunal.

When the present appeal was called for hearing, none appeared on behalf of the assessee, neither any application for adjournment was filed despite due service of notice. Therefore, we proceed to decide the appeal on the basis of material available on record & after hearing Ld. DR.

Ld. DR submitted before us that the appellant has not filed correct return of income voluntarily & therefore the appellant is liable for penalty. It was therefore requested by Ld. DR to confirm the penalty order passed by AO & sustained by Ld. CIT(A)/NFAC.

We have heard Ld. DR & perused the material available on record. From the statement of facts, we find that the assessee is a salaried employee of CEAT Limited & belongs to technical background. The return of most of the employees of CEAT LTD, Bosch Company, HAL & M & M including that of the assessee was filed by a tax consultant namely Kishor Patil. We further find that the assessee came to know from other employees in company that Mr. Kishor Patil with his expertise is able to legally calculate lower tax, resulting in refund of TDS deducted by employer. The assessee was unaware about the contents of the Income Tax Return filed by Kishor Patil & truly believed that the returns are filed legally as per the provisions of the Income Tax Act. The assessee being from technical background does not understand ABCD of Income Tax & therefore completely relied on the above named tax consultant, who without informing him & others, claimed excess deduction under chapter VI-A of the IT Act & claimed refund. It was Kishor Patil who cheated all the employees & claimed excess deduction in their returns without informing them for his own benefit. The fact of the cheating came in light when a survey u/s 133A was conducted at the premises of Mr Kishor Patil. When the fact that this kind of fraud was made in the name of number of persons all of them complaint to the Economic Offence Wing of Police Nashik, against the tax consultant Kishore Patil. The news regarding fraud committed by Kishore Patil also flashed in the daily news paper of Nashik. It is also apparent that there is no mistake of the assessee but it was the hidden interest of the tax consultant who triggered the gun by using shoulders of the assessee & many more for his own benefit. It is also found that as soon as the fact of excess deduction claimed, came to the knowledge of the assessee he immediately contacted another genuine tax consultant who prepared and furnished correct return in response to the notice u/s 148 of the IT Act & paid the due tax with interest, even before the issue of notice u/s 148 of the IT Act. We find that the Assessing Officer has levied penalty u/s 270A(8) of the IT Act of Rs.1,08,470/- on the basis of the fact that the correct income was not returned voluntarily but only after issue of notice u/s 148 of the IT Act. It is also found that when the notice u/s 148 was issued the appellant has disclosed his correct income & paid the due tax before issue of notice. We also find that the Assessing Officer has accepted the return as it is which was furnished by the appellant in response to the notice u/s 148 of the IT Act. We cannot accept the contention of Ld. DR that the revised return was not voluntary therefore the penalty u/s 270A of the Act is inevitable. From the perusal of penalty order, it appears that the penalty u/s 270A was initiated for the assessment year under consideration and subsequently penalty of Rs.1,08,470/- u/s 270A(8) was imposed for underreporting of income as a consequence of misreporting. In this regard, we find that prior to imposition of penalty a notice to show-cause – why an order imposing penalty u/s 270A should not be passed, was issued to the assessee but the particular clause (‘a’ to ‘f’) of sub-section (9) of section 270A of the IT Act was not mentioned. Even in the penalty order only section 270A(8) has been mentioned but the relevant clause of subsection 9 was not mentioned. In such kind of situation, we find support from the decision of Co-ordinate Bench of this Tribunal in the case of Shashikant Sukdeo Ambekar in & 366/PUN/2023 dated 20-07-2023 wherein under identical facts and similar circumstances the Tribunal has deleted the penalty u/s 270A by observing as under : - “8. In the case under consideration, the AO has failed to identify the specific Clauses from Clause (a-f) of section 270A(9) of the Act. Therefore, respectfully following ITAT Pune and ITAT Mumbai decisions the AO is directed to delete the penalty under section 270A of the Act. Accordingly, grounds of appeal