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Facts
The assessee, a salaried individual, initially did not file an ITR for AY 2018-19. After receiving a notice under Section 148 based on TDS information indicating escaped assessment, the assessee filed a return declaring income, which was accepted. The Assessing Officer levied a penalty under Section 270A for misreporting income due to the initial non-filing and a short deduction of tax by the employer on additional salary, which the assessee subsequently rectified.
Held
The Tribunal held that considering the assessee subsequently filed the return and paid all due taxes after the Section 148 notice, and had promptly rectified the short deduction, no penalty under Section 270A for misreporting of income is leviable in this case. The appeal of the assessee was allowed.
Key Issues
Whether penalty under Section 270A for misreporting of income is leviable when the assessee filed a return and paid taxes after a Section 148 notice, and the short deduction of tax by the employer was rectified.
Sections Cited
270A, 270A(7), 270A(9), 148, 192
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR.BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL
Shri Sulabh Padshah, A.R. Appellant by : Respondent by: Ms. Ketaki Desai, Sr. DR Date of Hearing 07.01.2025 24.01.2025 Date of Pronouncement O R D E R PER: DR. BRR KUMAR, VICE PRESIDENT:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeal)/National Faceless Appeal Centre (NFAC), Delhi, vide order dated 04.04.2024 for the Assessment Year 2018-19. 2. The Assessee has taken the following grounds of appeal:-
1. The Learned CIT (Appeals) has grossly erred in confirming the penalty levied u/s 270A(9) of the Income Tax Act of Rs 12.75.924/- on the ground that the Appellant has misreported his income for the year it is submitted that the Appellant has neither underreported nor misreported his income and thus invoking of provisions u/s 270A(9) of the Act is completely illegal and unjustifiable. In view of this, the impugned penalty levied on account of misreporting of income Rs 12,75,924/- deserves to be deleted. The same be held now Asst.Year 2018-19 - 2– 2. The Learned CIT (Appeals) has erred in facts and on law in confirming the penalty levied on aground that the Appellant has suppress the fact by not filing Original ITR. It is submitted that the Original ITR could not be filed because of bonafide reasons and the Appellant has disclosed and offered full income in ITR filed u/s 148 of the Act duly accepted by Id AO during assessment proceeding On facts and circumstances of the case, the provisions u/s 270A(9) of the Act are not at all attracted in case of Appellant and thus huge penalty levied on account of mis- reporting of income @ 200% of tax liability Rs. 12,75,924/- be deleted in the interest of justice. 3 Without prejudice to the above, the lower authorities have erred in levying and confirming penalty of Rs. 12,75,924/ 200% of total tax liability of Rs 6,37,962/-. It is submitted that the employers of the Appellant had already deducted the TDS of Rs 3,75,600/- towards total tax liability and thus there is neither revenue loss to that extent nor question of underreporting of income or misreporting of income to that extent. In view of this, the maximum penalty be levied only on difference amount of Rs 2,62,362/- and not at all on entire tax liability. The same please be held accordingly.
4. Without prejudice to the above, the Learned CIT (Appeals) has erred in confirming the penalty levied of Rs. 12,75,924/- considering the same as misreporting of income u/s 270A(9) of the Act. It is submitted that in any event the Appellant's case is not at all falling under clause (a) to clause (f) of Sub section 9 of Section 270A and thus there is no question of misreporting of income. In view of this, the maximum penalty be levied in case of Appellant for under reporting of income as provided under Section 270A(7) of the Act and the remaining penalty levied kindly be deleted accordingly.
5. The Order passed by the learned CIT(A) is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now.
6. Your appellant craves leave to add, alter and/or to amend all or any of the grounds before the final hearing of appeal.
Facts relevant for adjudication of the core issue are that the assessee did not file his return of income for AY 2018-10. The assessee is a salaried person working in Tata Power Company Ltd. The assessee had been credited substantial amount as reflected from TDS statements u/s.192 during the Financial Year 2014-15. Assessee was issued show-cause as to why a notice u/s.148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant AY 2018-19. Subsequently, notice u/s.148 was issued on Asst.Year 2018-19 - 3– 30.03.2022 asking the assessee to file return against which the assessee filed return of income 14.12.2022 declaring total income of Rs.26,89,600/- the assessment has been completed accepting the return income. Owing to the non-filing of the return and short deduction of tax of Rs.2,62,362/-. The Assessing Officer initiated and levied penalty u/s. 270A for mis-reporting of the income. The assessee unsuccessfully contested before the Ld. CIT(A) which culminated in filing the appeal before Tribunal. Before us it was submitted by the Ld.AR that in response to notice u/s.148 the assessee had duly filed return of income and the taxes have been deducted by the employee on the regular salary however, the employer did not deduct TDS of Rs. Rs.2,62,362/- on the additional salary paid. It was submitted that having made aware of the short deduction of tax the assessee has promptly rectified and filed the return, hence no penalty is leviable. On the other hand, Ld. DR argued that but for the notice issued u/s.148 the assessee could not have filed the return of income. Rebutting the argument of Ld. DR, the Counsel for the assessee submitted that the return have been filed, the due taxes have been paid, hence no penalty is leviable.
We have perused the facts on record.
The provision of section 270A(9) reads as under:
Section 270A(9) in The Income Tax Act, 1961 “…(9)The cases of misreporting of income referred to in sub-section (8) shall be the following, namely:— (a)misrepresentation or suppression of facts; (b)failure to record investments in the books of account; Asst.Year 2018-19 - 4– (c)claim of expenditure not substantiated by any evidence; (d)recording of any false entry in the books of account; (e)failure to record any receipt in books of account having a bearing on total income; and (f)failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply…”
On going through the provisions of the Act, the factum of filing of return and payment of entire taxes, keeping in view the specific facts and circumstances of the instant case, we have no hesitation to hold that no penalty u/s.270A for mis-reporting of income is leviable in this case.
In the result, the appeal of the assessee is allowed.