SANTOSH ASHOKRAO BARHANPURKAR,NASHIK vs. INCOME TAX OFFICER WARD 2(1), NASHIK

& 2132/PUN/2024 2. Since the identical facts and common issues are involved in both the above captioned appeals of the assessee, we proceed to dispose of the same by this common order. 3. First, we shall take up the appeal of the assessee in A.Y. 2016-17 : 4. The appellant has raised the following grounds of appeal :-

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 BOSCH Limited & belongs to technical background. The return of most of the employees of Bosch Company, 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 & 2132/PUN/2024 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 & 2132/PUN/2024 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 271(1)(c) of the IT Act of Rs.36,000/- on the basis that the assessee has not filed correct income voluntarily. 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 appeal has not been filed by the appellant against assessment order wherein penalty was initiated & the revised return was not voluntary therefore the penalty u/s 271(1)(c) is inevitable. From the perusal of penalty order, it appears that the Assessing Officer himself is not sure about the particular limb under which the penalty is imposed. In para 16 of the penalty order, it is mentioned that the assessee has furnished inaccurate particular of income whereas in para 18 of the penalty order the Assessing Officer has mentioned that in view of the concealment of income the penalty u/s 271(1)(c) is imposed. In & 2132/PUN/2024 this kind of situation, we find support from a Co-ordinate Bench decision of this Tribunal passed in the case of Sunil Chunilal Kumavat vs. ITO in 1401 & 1402/PUN./2023 for assessment years 2016-2017, 2017-2018 & 2018-2019 order dated 22.03.2024, wherein, under identical situation and similar facts, the penalty u/s 271(1)(c) & 270A was deleted by observing as under :- “3. I have given my thoughtful consideration to the assessee’s pleadings and Revenue’s foregoing vehement contentions. I find no reason to sustain either one of these three penalties. This is for the precise reason that the Assessing Officer’s sec.271(1)(c) order in the first and foremost assessment year 2016-17 had concluded that the assessee’s bogus claim under sec.80C deduction(s) is an instance of “furnishing inaccurate particulars of income” in para-iii pages 7 to 8 in the NFAC’s order. Whereas it’s impugned discussion in para.7.9 onwards holds it as a fit case for confirming the impugned penalty after having found the assessee having concealed his taxable income. I am of the view that such a deviation regarding applicability of the statutory twin “limbs” of “concealment of taxable income vis-à-vis furnishing of inaccurate particulars thereof ”; is not sustainable in law in light of hon’ble jurisdictional high court’s decision in Mohd. Farhan A. Shaikh vs. ACIT [2021] 434 ITR (1) (Bom.). The impugned penalty is deleted in very terms. The assessee succeeds in his instant first and foremost appeal ITA.No.1447/PUN./2023 for assessment year 2016-2017.

The outcome would be hardly any different in the assessee’s latter twin appeals I.T.A.Nos.1401 & 1402/PUN./2023 for assessment years 2017-2018 & 2018-2019, respectively. The Revenue could not dispute the clinching fact that although the learned lower authorities have levied 200% penalty(ies) in assessee’s case going by sec.270A(8) on one hand; whereas they nowhere specify the corresponding limb(s) of “under-reporting of income in consequence of any mis-reporting” thereof; as prescribed sub-sec. (9) containing (a) to (f) clauses. Faced with this situation, I adopt stricter interpretation as per Commissioner of Customs (Imports), Mumbai vs. Dilip Kumar And Co. & Ors. [2018] 9 SCC 1 (SC) (FB) and conclude that these twin penalties for assessment years 2017-2018 and 2018-2019 also deserve to be deleted. Ordered accordingly.”

Since penalty u/s 271(1)(c) was applicable only upto assessment year 2016-17 and was replaced by a new section i.e. 270A of the IT Act, the Assessing Officer under similar facts imposed penalty u/s 270A of the IT Act for assessment year 2017-18. As the facts of the case have already been discussed in preceding paragraphs, we proceed to decide the appeal accordingly.

For the assessment year under consideration, notices u/s 147/148 were issued to the assessee and the assessee furnished return in response to above notices and disclosed the correct income & 2132/PUN/2024 which was accepted by the Assessing Officer while completing the assessment. Penalty u/s 270A was initiated in the assessment order and subsequently penalty of Rs.66,332/- u/s 270A(9) 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. 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