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Income Tax Appellate Tribunal, DELHI BENCH “C”: NEW DELHI
Before: SHRI M BALAGANESH
O R D E R
PER Ms. MADHUMITA ROY, JM:
The instant appeal, preferred by the assessee, is directed against the order dated 14.07.2025 (DIN & Order No. ITBA/APL/S/250/2025-26/1078467767(1), passed by the Ld. CIT(A), Delhi-3, arising out of the penalty order dated 07.03.2024, passed by the Deputy/Assistant Commissioner of Income Tax, central Circle-3, New Delhi, under Section 270A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for the Assessment Year 2017-18. adjudication:
“1. That the learned Commissioner of Income Tax (Appeals)-23. New Delhi has erred both in law and on facts in upholding penalty of Rs. 94,120/- levied in an order dated 7.3.2024 under section 270A of the Act.
2. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that in absence of any specific show cause notice having been issued, the levy of penalty was otherwise wholly illegal.
3. That furthermore that since no valid satisfaction was recorded in the order of assessment, penalty levied was otherwise too not in accordance with law.
4. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding penalty @ 50% of the amount of tax payable on addition of Rs. 5,43,930/- on account of difference in turnover as per audited books of account and service tax return in Form ST-3 4.1 That while upholding the aforesaid penalty the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the service tax return in Form ST-3 was filed based on unaudited books of accounts and therefore mistake done in reporting the turnover in service tax return was a bonafide mistake. 4.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the return of income under the Act was filed based on the audited financial statements, which had been duly accepted as such by the learned Assessing Officer and therefore no penalty can be levied and upheld based on difference in total turnover as per audited financial statements and Form ST-3. 4.3 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that all the material facts to substantiate the explanation offered were duly disclosed by the appellant, therefore no penalty can be levied.
5. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate the relevant evidence placed on record and drawn factually incorrect and legally unsustainable inferences based on irrelevant and extraneous consideration and thus, penalty upheld is wholly unwarranted and not in accordance with law. 3. Facts of the case, in brief, are that the assessee filed its return of income for A.Y, 2017-18 on 31.10.2017 declaring the total income at Rs. 11,09,01,390/-. The case was selected for Limited Scrutiny through CASS on account of – (i) large share premium received during the year; and (ii) higher turnover reported in Service Tax Return as compared to ITR. During scrutiny assessment the Ld. AO by observing that assessee himself had accepted mismatch in total turnover, finalized the scrutiny assessment under Section 143(3) of the Act on 19.11.2019 at a total income of Rs. 11,14,45,320/-by adding Rs. 5,43,930/- on account of under reporting turnover. In appeal the Ld. CIT(A) affirmed the action of the Ld. Assessing Officer. The Assessing Officer also initiated penalty proceedings under Section 270A of the Act for under reporting of income and vide penalty order dated 07.03.2024 imposed a penalty of Rs. 94,120/-, inter alia, by observing as under:
“8. A perusal of above clause shows that penalty is 50% of the amount of tax payable on under reported income where income has been under-reported by any person. The facts of the case, as discussed above, clearly shows that the assessee has failed to record actual turnover in books of account having a bearing on total income and accordingly the assessee has committed default u/s 270A(2)(a) of the Act. Hence, I am satisfied that the assessee has under reported his income as the income assessed is greater than the income determined in the return processed under clause (a) of sub-section 1 of section 143 of the Act and accordingly this is a fit case for imposition of 270A(2)(a) of the Act, the penalty is accordingly calculated and imposed as under: - Particulars Amount (in Rs.) Total amount of under-reported Rs. 5,43,930/- income Tax payable thereon Rs. 1,88,243/- Penalty @ 50% Rs. 94,122/-
9. Accordingly, penalty u/s 270A of the Act amounting to Rs. 94,120/- (rounded off) is hereby imposed in this case on the under-reported income.” 3.1 In appeal, the Ld. CIT(A) affirmed the penalty levied by the Assessing Officer, hence the instant appeal before us.
Learned counsel for the assessee has placed on record detailed written synopsis. In fact the Ld. counsel for the assessee reiterated the submissions made in the synopsis and prayed for deletion of the impugned penalty levied under Section 270A(2)(a) of the Act. For the sake of clarity the synopsis filed on behalf of the assessee is reproduced herein below:
MAY IT PLEASE YOUR HONOURS 1 That instant appeal filed by appellant company arises from order of learned Commissioner of Income Tax Appeals dated 14.7.2025. 2 Sequence of Events is as under. Sr. Date Particulars (Page of Paper Book) No. i) 31.10.2017 Return of income declaring an income of Rs. 11,09,01,390/- for financial year 2016-17 relevant to assessment year 2017- 18 along with following annexures; Acknowledgement of return of income (1)
Computation of income (2-18) - Audit report u/s 44B of the Act (19-36) Audited financial statement (37-62) ii) 19.11.2019 Order of assessment passed u/s 143(3) of the Act making an addition of Rs.5,43,930/- to the income of the appellant company. (63-65) iii) 19.11.2019 Notice issued u/s 274 read with section 270A of the Act (66) iv) 01.01.2020 Appellant company filed an appeal before learned Commissioner of Income Tax Appeals against order of assessment passed u/s 143(3) of the Act (67-68) v) 04.01.2020 Reply filed by the appellant company in response to notice u/s 274 read with section 270A of the Act (69-70) vi) 08.05.2020 Notice issued u/s 274 read with section 270A of the Act (71) vii) 31.07.2021 Notice issued u/s 274 read with section 270A of the Act (72) viii) 05.09.2021 Notice issued u/s 274 read with section 270A of the Act (73) ix) 09.09.2021 Reply filed by the appellant company in response to notice u/s 274 read with section 270A of the Act (75-76) x) 28.02.2022 Notice issued u/s 274 read with section 270A of the Act (79- 80) xi) 09.03.2022 Order passed by learned Commissioner of income Tax Appeals against order of assessment passed u/s 143(3) of the Act xii) 24.03.2022 Reply filed by the appellant company in response to notice u/s 274 read with section 270A of the Act (99-101) xiii) 23.02.2023 Notice issued u/s 274 read with section 270A of the Act(102) xiv) 30.03.2023 Reply filed by the appellant company in response to notice u/s 274 read with section 270A of the Act (103-123)
That on 7.3.2024, learned Assistant Commissioner of Income Tax, Central Circle- 3, Delhi proceeded to levy penalty of Rs. 94,120/- in an order dated 7.3.2024 u/s 270A of the Act, for alleged under reporting income. That on 7.3.2024, learned Commissioner of Income Tax (Appeals)-24, New Delhi dismissed the appeal filed by the appellant company by holding as under: "Findings & Decision 5. Ground No. 1: In this ground the appellant contented that the penalty of Rs. 94,120/- levied under Section 270A is erroneous in law and on facts.
5.1 The penalty was levied on Rs. 5,43,930/- being the difference in turnover reported between audited books of accounts and ST-3 returns, computed at 50% of tax payable. 5.2 This is a general ground and does not offer substantive rebuttal. Merits of levy are addressed under specific grounds. Ground is noted, no separate adjudication required.
6. Ground No. 2: In this ground the appellant that the mismatch was due to filing of ST-3 based on unaudited books, and income tax return was correctly filed based on audited statements. The mistake was bona fide and no concealment occurred. 6.1 As per Assessment Order the assessee admitted the discrepancy only during assessment. The error led to under-reported income of Rs. 5,43,930/-, which attracted penalty under Section 270A(2)(a). 6.2 Filing statutory returns based on unaudited records amounts to carelessness. The discrepancy remained unrectified until detection. While the ITR was filed on audited accounts, prior inaccurate disclosures constitute under-reporting. The assessee's explanation does not meet the threshold of bona fide compliance. Therefore, ground is dismissed.
10. The appeal is dismissed. The penalty of Rs. 94,120/-under Section 270A is upheld." Grounds 1 to 5 of grounds of appeal relates to levy of penalty of Rs. 94,120/- u/s 270A of the Act. The contentions of the appellant in brief are as under Sr. Contention in brief Paras of No. this submission i) No specific charge in the notice and therefore penalty 7-8 levied is untenable. ii) That penalty proceedings and quantum proceedings are 9 independent and that findings in the quantum proceedings, though relevant, are not conclusive or determinative of the penalty proceedings iii) That appellant has not furnished any “inaccurate" 20-21 particulars of income, as all facts are brought or record which have not been found to be inaccurate or erroneous or false and therefore levy of penalty is not in accordance with law
NO SPECIFIC CHARGE/BASIS IN THE NOTICE: INFACT NOTICE ISSUED IS VAGUE AND NON-SPECIFIC AND THEREFORE NOTICE TO LEVY PENALTY IS UNTENABLE: It is submitted that the proceedings initiated are vitiated and not in accordance with law. It is submitted that notices dated 19.11.2019 (page 66 of Paper Book), 8.5.2020 (page 71 of Paper Book),, 30.7.2021 (page 72 of Paper Book), 5.9.2021 (page 73 of Paper Book), 28.2.2022 (pages 79-80 of Paper Book), and 23.2.2023 (page 102 of Paper Book), u/s 270A of the Act are highly vague in as much as they do not state as to which clause of section 270A(2) of the Act, appellant is alleged to have under-reported income. Infact, even the amount of alleged under-reporting of income has neither been specified and, nor determined in the notice. Also, in the alternative, section 270A(3) to section 27A(5) of the Act remain also totally un-complied with. The submission therefore is that, notices are vague and thus illegal Reliance is placed on the following judgments: i) W.P(C) 5111/2022 (Del) dated 28.03.2022 Schneider Electric South East Asia (HQ) Pte Ltd vs. ACIT ii) 288 Taxmam 768 (Del) Prem Brothers Infrastructure LLP v. NFAC iii) dated 30.11.2023 Scholars International Educational v. DCIT(Exemptions) iv) dated 20.3.2024 Jaina Marketing & Associates v DCIT v) dated 22.5.2023 Saltwater Studio LLP v. NFAC, Delhi vi) ITA No. 54 & 55/Pune/2023 dated 23.6.2023 Kishore Digambar Patil v. ITO vii) ITA No. 1054/Bang/2024 IIFL dated 27.9.2024 Samasta Finance Ltd. Vs. DCIT viii) ITA No. 1779/Bang/2024 dated 22.01.2025 Mr. Nateshan Sampath vs. DCIT IX) 214 ITD 426 (Ahmedabad- Trib.) dated 26.8.2025 Snehalkumar Bhogilal Trivedi vs. NFAC 8. Reliance is also placed on the following judicial pronouncements: A SECTION 271(1)(c) OF THE ACT SUPREME COURT i) 242 Taxman 180 (SC) CIT v. SSA'S Emerald Meadows SLP Dismissed [arising out of CIT v. SSA'S Emerald Meadows reported in 73 taxmann.com 241 (Kar)] ii) 282 Taxman 463 (SC) PCIT v. Goa Coastal Resorts and Recreation (P.) Ltd.SLP Dismissed [arising out of PCIT v. Goa Coastal Resorts and Recreation (P.) Ltd. reported in 272 Taxman 157 (Bom)] HIGH COURTS i) 432 ITR 84 (Del) Pr. CIT v. Sahara India Life Insurance Company Ltd. ii) 359 ITR 565 (Kar) CIT v. Manjunatha Cotton & Ginning Factory iii) 434 ITR 1 (Bom) (FB) Mohd. Farhan A. sheikh v. DCIT iv)
(Bom) dated 5.1.2017 CIT v. Shri Samson Perincherry v) 264 CTR 502 (Karn) CIT v. MWP Ltd. SLP dismissed by Apex Court in CC No. 7485/2014 vi) 370 ITR 475 (AP) CIT v. Lotus Constructions vii) 237 Taxman 702 (Kar) Safina Hotels (P) Ltd. v. CIT 9. THAT PENALTY PROCEEDINGS AND QUANTUM PROCEEDINGS ARE QUANTUM INDEPENDENT AND THAT FINDINGS IN THE PROCEEDINGS, THOUGH RELEVANT, ARE NOT CONCLUSIVE OR DETERMINATIVE OF THE PENALTY PROCEEDINGS: It is further submitted that while initiating penalty proceedings the learned Assessing Officer has simply relied upon the findings arrived at in the quantum proceedings, without appreciating that penalty proceedings and quantum proceedings are independent and that findings in the quantum proceedings, though relevant, are not conclusive or determinative of the penalty proceedings. Reliance is placed on the following judgments: i) 86 ITR 376 (SC) CIT v. Khoday Eswarsa ii) 123 ITR 457 (SC) Anantharam Veerasinghaiah vs. CIT iii) 291 ITR 519 (SC) Dilip N. Shroff v. JCIT iv) 292 ITR 11 (SC) T. Ashok Pai v. CIT v) 190 Taxman 157 (Del) CIT v. Arctic Investment (P) Ltd. vi) 145 Taxman 530 (Del) CIT v. Globe Sales Corporation vii) 219 ITR 267 (Del) CIT v. J. K. Synthetics Limited viii) 160 ITR 94 (AP) (FB) CIT V. H. Abdul Bakshi ix) 219 CTR 447 (Kar) Bhadra Advancing (P) Ltd. v. ACIT x) 241 ITR 124 (MP) affirmed in 251 ITR 9 (SC) CIT v. Suresh Chandra Mittal "It is well settled that under section 271(1)(e) the initial burden lies on the Revenue to establish that the assessee had concealed the income or had furnished inaccurate particulars of such income. The burden shifts to the assessee only if he fails to offer any explanation for the undisclosed income or offers an explanation which is found to be false by the assessing authority. However the proviso to Explanation I provides for shifting of this burden again where the explanation offered by the assessee is found to be bona fide. In the present case though it is true that the assessee had not surrendered at all and that he had done so on the persistent queries made by the Assessing Officer but once the revised assessment was regularised by the Revenue and once the assessing authority had failed to take any objection in the matter the declaration of income made by the assessee in his revised returns and his explanation that he had done so to buy peace with the Department and to come out of vexed litigation could be treated as bona fide in the facts and circumstances of the case. Therefore the Tribunal was justified in cancelling the penalty levied by the Assessing Officer and affirmed by the Commissioner of Income-tax (Appeals) in the facts and circumstances of the case. This reference is accordingly answered in the affirmative holding that the Tribunal was justified in doing so." xi)
Pr CIT vs. Prashant Shrivastava "11. It is not the Revenue's case that the explanation offered by theAssessee herein is false. At best it could be stated that the Assessee failed to substantiate the explanation he offered. The explanation was that the vouchers were not available. There was a dispute that the Assessee had with his accountant who appears to have misplaced the relevant vouchers. The question is whether such explanation can be said to be bona fide. It is one thing to say that the explanation about the dispute the Assessee had with his accountant, as a result of which the vouchers could not be produced, was not offered in the first instance before the AO and only subsequently before the CIT (A). It is another to state that the said explanation was either false or not bona fide. The Revenue has not been able to show that the explanation offered by the Assessee either lacked in bona fides or was false. In the circumstances, the decision in Mak Data P. Ltd. v. Commissioner of Income Tax (supra) is distinguishable on facts. ON MERITS 10. It is submitted that the learned Assessing Officer while making the addition has held as under: "It has been found that assessee himself accepted that there is mismatch in total turnover and provided below table and accepted that assessee had under reported total turnover as shown in below table. S. No. Particulars Amount A Turnover from Construction Business 2,71,11,88,127 Services B Trading in Securities 7,76,58,11,004 C Rori Sale 22,00,000 Total Turnover 10,47,91,99,131 D Turnover as per ST 3 2,71,17,32,057 E Difference in ST 3 (A-D) 5,43,930 At the outset it is respectfully submitted that the aforesaid addition is based on fundamental misconception. It is respectfully submitted that the appellant in reply dated 14.9.2019 and 6.11.2019 had submitted that there was a mistake in the declaration of turnover furnished in the service tax return filed by the appellant. It was submitted that the turnover was inadvertently excessively declared in the service tax return by the appellant. Copy of the replies is placed at pages 126-131 of Paper Book and pages 159-160 of Paper Book and relevant portion of which extracted hereunder:- i) Reply dated 14.09.2019 (pages 126-131 of Paper Book)
Point 3: c. Detail of party wise contract receipts during the Assessment Year 2017-18 is enclosed herewith as Annexure 3. (pages 130-131 of Paper Book)
Detail of partywise contract receipts S. No. Client Name Amount 1 DDA 32,20,47,452 2 Housing Board Gurgaon 64,39,759 3 HSIDC 77,81,60,166 4 HUDA 1,46,55,41,389 5 PWD 13,62,99,361 6 Rangoli Buildtech Pvt. Ltd. 27,00,000 Total 2,71,11,88,127 Reconciliation of Turnover of books with service tax return
S. No. Particulars Amount A Turnover from Construction Business 2,71,11,88,127 Services B Trading in Securities 7,76,58,11,004 C Rori Sale Total Turnover 10,47,91,99,131 D Turnover as per ST 3 2,71,17,32,057 E Difference in ST 3 (A-D) 5,43,930
Note:- Turnover mistakenly shown more by Rs 5,43,930/- in the month of march Point 4 d. Copy of service tax return for the Assessment Year 2017-18 is enclosed herewith as Annexure 4 & 5 (pages 132-158 of Paper Book) Point 5: e. Copy of financial statement for the year under consideration is enclosed herewith as Annexure 4 & 5 (pages 1-62 of Paper Book) …. ⅱ) Reply dated 06.11.2019 (pages 159-160 of Paper Book) ….. . During the year under consideration, Assessee was having total turnover of Rs. 10,47,91.99.131/-, We are attaching herewith all detailed documentary evidences of all different turnovers alongwith the reconciliation Reconciliation of Turnover of books with service Tax Return Month Turnover as Total Turnover RLF Income Rori (D) Construction Diff. per ST-3 (A) as per books (C) Turnover (E) = (A) – (E) (B) (B-C-D) April 21.63.28.587 41,63,28,587 20,00,00,000 21,63,28,587 May 15,94,03,437 57.30,73,351 40,38,95,982 16,91,77,369 -9,773,932 June 2,60,82,167 2,60,82,167 2,60,82,167 0 July 15,70,90,299 15,70,90,299 15,70,90,299 0 August 7,73,43,498 13,52,87,267 5,79,43,769 7,73,43,498 0 September 39.11.84,073 97,78,42,770 58,66,58,697 39,11,84,073 0 October 11,11,91,613 18,64,75,199 8,50,57,518 10,14,17,681 97.73.932 November 1,88,93,265 1,88,93,265 1,88,93,265 0 December 2,24,12,884 12,82,72,687 10.49.59.803 9,00,000 2,24,12,884 0 January 6,59,26,638 16,55,53,415 9,89,26,777 6,59,26,638 0 February 40,98,83,295 237.81,46,047 196,82,62,752 40,98,83,295 0 March 105,59,92.301 531,61,54,077 426,01,05,706 6,00,000 105,54,48,371 5,43,930 271,17,32,057 1047,91,99,131 776,58,11,004 22,00,000 271,11,88,127 5,43,930
Reasons for difference :-
2. Turnover mistakenly shown more by Rs. 5,43,930/- in the month of March ….. .
It is thus submitted the findings of learned Assessing Officer that under reported of turnover by appellant company are factually incorrect. On the contrary turnover was mistakenly shown more in the month of March 2016 in the service tax return. In such circumstances the addition made is based on erroneous assumption of facts and law, therefore untenable.
In other words it is submitted that the learned Assessing Officer has made addition on the ground that there was under reporting of income by Rs 5,43,930/- as there was mismatch in turnover from construction business services of Rs 2,71,11,88,127 as per audited books accounts and total turnover as reflected in Service tax return of Rs. 2,71,17,32,057/-. It is submitted that appellant company had mistakenly incorrectly disclosed lower turnover by Rs 97,73,932/- in the month May 2016 therefore same amount reflected in the month of October 2016 to nullify its impact and paid service tax. It is also submitted that company had incorrectly disclosed higher turnover in the month of march by Rs 5,43,930/- in the service tax return filed by the appellant company, but the same cannot ipso facto be a basis to make addition more particularly when admittedly and undisputedly turnover as disclosed in the audited books of accounts has been accepted. The aggregate turnover as per audited books of accounts on account of construction business is Rs 2,71,11,88,127/- and not Rs 2,71,17,32,057/- as stated in service tax return. There is not a shred of evidences to dispute the turnover as declared in the audited books of accounts maintained and accepted in the order of assessment.
It is also submitted that the learned Assessing Officer has not pointed out any specific defect or discrepancy in the audited books of accounts maintained by the appellant company and were otherwise free from any qualification by the auditors. Infact, the details of properties and, their respective turnover was duly furnished during the assessment proceedings. There is no allegations that any of the parties have alleged that the turnover declared in books were either incorrect or incomplete. The onus is upon learned Assessing Officer to show that either the books of accounts maintained by the appellant company were incorrect or incomplete and thus once audited books of accounts stand accepted and not rejected u/s 145(3) of the Act; addition is not tenable. That appellant company in this regard seeks to place reliance upon following judicial pronouncements:
i) 325 ITR 13 (Del) CIT vs. Paradise Holidays ii)
(Del) dated 03.08.2010 CIT vs. M/s Rice India Exports Pvt. Ltd. iii) 326 ITR 223 (Del) CIT vs. Smt. Poonam Rani iv) 324 ITR 95 (Del) CIT vs. Jas Jack Elegance Exports v)
(Del) dated 3.05.2012 CIT vs. Winner Constructions (P) Ltd.) vi) 372 ITR 381 (Del) CIT v. Zohra Emporium VI) vii) 315 ITR 185 (P&H) CIT vs. OM Overseas viii) 320 ITR 116 (All) CIT vs. Mascot India Tools & Forgings (P) Ltd. ix) 64 DTR 409 (Jai) Asstt. CIT vs. Shankar Exports x) dated 04.05.2017 (All) CIT vs. M/s Pashupati Nath Agro Food Products (P) Ltd xi) 316 ITR 120 (Raj) Malani Ramjivan Jagannath v. ACIT xii) ITA No. 336/Ind/2012 dated 31.10.2012 ACIT vs. Dewas Soya Ltd.
15 It is also submitted that where the books of accounts have been audited by chartered accountants under the provisions of the Companies Act and also under Income Tax Act and the Assessing Officer has no material on record to show that the books of accounts are unreliable then no addition is tenable. In this regard, reliance has been placed on the following judgments i) 113 ITR 389 (Del) ACIT vs. Jay Engineering Works
...it is quite competent for the income-tax authorities not only to accept the auditors' report, but also to draw the proper inference from the same.
The income-tax authorities could, therefore, come to the conclusion that since the auditors were required by the statute to find out if the deductions claimed by the assessees in their balance-sheets and profit and loss accounts were supported by the relevant entries in their account books, the auditors must have done so and must have found that the account books supported the claims for deductions, when the deductions were disallowed. by the ITO on the ground that detailed information regarding them was not available, justice was not done to the assessees. It was not possible for the assessees to produce the original account books, which were destroyed in fire. There was, however, other material mainly consisting of the auditors' reports from which it could be inferred that the deductions were properly supported by the relevant entries in the account books. In a sense it may be a question of law as to what the meaning of "material" is and whether the auditors' reports were material. But the question of law is well settled and is not capable of being disputed and does not, therefore, call for reference. ii) 99 TTJ 394 (Rajkot) ITO vs. Girish M. Mehta
As per our considered view before rejecting the books of account, the Department has to prove that accounts are unreliable, incorrect or incomplete, the accounts regularly maintained in the course of business, duly audited under the provisions of L.T. Act and free from any qualification by the Auditors, should be taken as correct unless there are strong and sufficient reasons to indicate that they are unreliable. Even though, it is not possible to lay down the exact circumstances in which accounts should be rejected as unreliable or incorrect, yet the accounts may be rejected as unreliable if important entries and transactions are omitted therefrom or if proper particulars and vouchers, bills, etc. are not forthcoming or if they did not include entries relating to particular class of business transaction. The assessee should invariably be given opportunity for offering explanation regarding defects in accounts and on his failure to satisfactorily explain the defects, the Department would be justified in rejecting the books of account. Thus, books of account should not be rejected light-heartedly. The duty of the Assessing Officer is to administer the provisions of the Act in the interest of public revenue and to prevent evasion or escapement of tax legitimately due to the State. At the very same time, the duty of the Appellate Authority is to ensure not only that the provisions of the Act are administered in the interest of public revenue so as to prevent evasion/escapement of tax, but at the very same time to ensure that only the tax legitimately due to the State is collected.
An assessment under section 144 read with section 145 is an assessment in which the Assessing Officer can estimate the assessee's income after rejecting the books of account and for rejecting the books of account, it is the revenue's onus to prove that either the books of account maintained by the assessee are not correct and complete or the method of accounting adopted is such that true profit cannot be deduced therefrom. From these legal provisions, what flows is that if the revenue doubts the correctness of Gross Profit declared by the assessee, it first of all should reject the assessee's books of account after satisfying the mandatory requirements of section 145 which can be done only after pointing out a specific defect in the books of account. As the onus to make out a case for rejection of books of account is on the Revenue, so the assessee cannot be burdened with the responsibility of proving a negative aspect of the matter meaning thereby the assessee cannot be held responsible for not having earned the profit at a particular rate. As per the Income-tax Laws, the assessee has to substantiate his return and if he furnishes or produces necessary evidence, which in the normal course of things is known as books of account, bills. vouchers, etc. in support of his return, then in order to rebut the assessee's reliance/submissions when the return is substantiated by such books of account, it is the Revenue's duty to carry on proper investigation, verification from such books of account and must call for any other explanation of evidence, if so required. After production of books of account and submission of explanation by the assessee, if any asked for, with respect to the contents of the return and books of account, the revenue may accept the same or after pointing out the specific defect may reject the books of account and proceed to determine the assessee's income as per the provisions of section 145. Income-tax provisions nowhere either authorize the Assessing Officer or cast an obligation on the assessee to prove a negative result, i.e., to prove as to why he failed to make a profit at a particular rate. In disposing of an appeal from against any order under section 143(3)/144, the First Appellate Authority need not confine itself only to the materials on record at the time of assessment. It may make such enquiries as it thinks fit. The First Appellate Authority has all the powers which the original authority may have. In the absence of any statutory provisions to the contrary, the appellate authority is vested with the plenary powers, which the subordinate authority has in the matter.
In this case, the CIT (Appeals) himself has looked into audited accounts as well as quantitative statement of daily sales and purchases and compared it with the rate prevailing in Ahmedabad Bullion Merchant Association and found that the profit arrived at in each and every transaction was correct.
All these exercise was done by the CIT(A) in the presence of the Assessing Officer. No ground has been taken by the Revenue with regard to any
Where the Assessing Officer makes estimations, he had to provide evidence and proof as to the falsity of the books of account, etc. where he failed to do so, he should not reject the books of account.
iii) 72 ITD 139 (ITAT-Amr) Shankar Rice Co vs. ITO
Coming now to another aspect of the arguments of the Id. D.R., namely, the submission that the books of account and records maintained by the assessee were "manufactured". In our opinion, this is a highly irresponsible statement unsupported by any material or evidence. It must be emphasized that the assessee maintains regular books of account and other statutory registers the latter prescribed by the State Govt. authorities and these are not only subject to audit by Chartered Accountants but periodical checks by the State Govt. officials as well, To this is linked the other submission of the Id. D.R. that in respect of statutory registers the validation is only of the entries on the dates when these are checked and not the others. We have yet to come acrss a more irrelevant submission since the system of test check/periodical check envisages random examination and whatever is found correct on check leads to a very safe assumption that the rest is also correct. No assessee would hope that he can make correct and wrong entries on different dates and pray that only the correct ones are verified and not the others. iv) 72 TTJ 886 (Ahmadabad) Pushpanjali Dyeing and Printing Mills Private Limited v JCIT; v) 60 TTJ 27 (Indore) Prahladdas Hari Kishan vs. ACIT vi) 69 TTJ 685 (Patna) Income Tax Officer vs. Mangalam Chemicals vii) 52 TTJ 203 (Jaipur) ACIT vs. Rahmat Khan Chandan Khan & Party
16 It is also submitted that entries in service tax returns are determinative cannot be a conclusive basis to compute the income of an assessee. Reliance is placed on following judgments: i)
(Del) dated 30.09.2011 CIT vs. Arvind Kumar Jain ii) 82 ITR 363 (SC) Kedarnath Jute Mfg. Co. Ltd. ii) iii) 227 ITR 172 (SC) Tuticorn Alkali Chemicals and Fertilizers Ltd. vs. CIT 285 ITR 221 (Mad) CIT vs. Idhayam Publications Ltd 17 It is submitted that it is a case of lack of inquiry. In this regard appellant company seeks to place reliance on following judgments: ⅰ) 361 ITR 10 (Del) CIT v. Gangeshwari Metal (P) Ltd. ii) 357 ITR 146 (Del) CIT vs. Fair Finvest Ltd iii) dated 11.4.2012 (Del) CIT v. Goel Sons Golden Estate (P) Ltd. iv) 342 ITR 169 (Del) Nova Promoters & Finlease (P) Ltd v) dated 13.1.2015 (Del) Funnay Time Finvest Ltd vi) 361 ITR 220 (Del) CIT vs. M's Kamdhenu Steel and Alloys Ltd.) vii) dated 12.8.2015 (Del) CIT v. Vrindavan Farms (P) Ltd. viii) ITA No. 3342/D/2013 ITO v. XO Infotech Ltd. ix) 163 Taxman 482 (Del) CIT vs. Genesis Commet (P) Ltd x) 296 ITR 750 (Del) CIT v V.B. Aggarwal xi) 99 ITR 268 (Del) CIT vs. Divine Leasing and Finance Ltd xii) 49 ITR 650 (All) EMC Works (P) Ltd v ITO xiii) 49 ITR 561 (All) Nathu Ram Premchand vs. CIT
18. It is submitted that the learned Commissioner of Income Tax (Appeals) though has upheld the addition but in doing so he has not appreciated that in absence of rejection of books of accounts u/s 145(3) of the Act, no addition can be made to declared turnover as has held in paras 25 to 25.1 of this submission above Furthermore the observation that appellant had accepted the turnover in the service tax return is also factually incorrect as would be evident from the replies dated 14.9.2019 (pages 126-131 of Paper Book) and 6.11.2019 (pages 159-160 of Paper Book) and extracted in para 22 of this submission above.
19. It is submitted that the finding of the learned Commissioner of Income Tax (Appeals) in upholding the addition may not be taken as a basis to sustain the penalty as there is no underreporting income, particularly when admittedly and undisputedly the books of accounts are duly audited both under the Act and Companies Act 2013 and there is no specific defect in the books of accounts much less rejection of books of accounts u/s 145(3) of the Act. In such circumstances inadvertent mistake in the service tax return of March 2017 could not ipso facto be a basis to levy of penalty under section 270A of the Act.
20 THAT WITHOUT PREJUDICE EVEN OTHERWISE APPELLANT HAS NOT FURNISHED ANY "INACCURATE" PARTICULARS OF INCOME, AS ALL FACTS ARE BROUGHT OR RECORD WHICH HAVE NOT BEEN FOUND TO BE INACCURATE OR ERRONEOUS OR FALSE AND THEREFORE LEVY OF PENALTY IS NOT IN ACCORDANCE WITH LAW: It is further submitted that assessee had not furnished any "inaccurate" particulars of income, as facts brought on record which have not been found to be inaccurate or erroneous or false. It is submitted that mere fact that addition has been made during the course of assessment proceedings by rejecting the claim of assessee does not itself amounts to hold that assessee has furnished inaccurate particulars of income. It is thus submitted that in absence of furnishing of inaccurate particulars of income; no penalty is leviable on the assessor u/s 271(1)(c) of the Act. Reliance is placed on the following judgments: i) 265 ITR 562 (SC) K.C. Builders v. ACIT ii) 291 ITR 519 (SC) Dilip N. Shroff vs. JCIT
"43. The expression "conceal" is of great importance. According to Law Lexicon, the word "conceal" means:
"to hide or keep secret. The word "conceal" is conceal are which implies to hide. It means to hide or withdraw from observation; to cover or keep from sight, to prevent the discovery of, to withhold knowledge of. The offence of concealment is, thus, a direct attempt to hide an item of income or a portion thereof from the knowledge of the income tax authorities."
In Webster's Dictionary, "inaccurate" has been defined as: "not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript."
It signifies a deliberate act or omission on the part of the assessee. Such deliberate act must be either for the purpose of concealment of income or furnishing of inaccurate particulars.
The term 'inaccurate particulars' is not defined. Furnishing of an assessment of value of the property may not by itself be furnishing of inaccurate particulars. Even if the explanations are taken recourse to, a finding has to be arrived at having regard to clause (a) of Explanation 1 that the Assessing Officer is required to arrive at a finding that the explanation offered by an assessee, in the event he offers one, was false. He must be found to have failed to prove that such explanation is not only not bona fide but all the facts relating to the same and material to the income were not disclosed by him. Thus, apart from his explanation being not bona fide, it should have been found as of fact that he has not disclosed all the facts which was material to the computation of his income."
iii) 322 ITR 158 (SC) CIT v. Reliance Petroproducts (P) Ltd
"9. We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word "inaccurate" has been defined as:-
"not accurate, not exact or correct; not according to truth, erroneous, as an inaccurate statement, copy or transcript". We have already seen the meaning of the word "particulars" in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars 11. In this behalf the observations of this Court made in Sree Krishna Electricals v. State of Tamil Nadu and Anr. [(2009) 23 VST 249 (SC) as regards the penalty are apposite. In the aforementioned decision which pertained to the penalty proceedings in Tamil Nadu General Sales Tax Act, the Court had found that the authorities below had found that there were some incorrect statements made in the Return. However, the said transactions were reflected in the accounts of the assessee. This Court, "So far as the question of penalty is concerned the items which were not included in the turnover were found incorporated in the assessee's account books. Where certain items which are not included in the turnover are disclosed in the dealer's own account books and the assessing authorities include these items in the dealer's turnover disallowing the exemption, penalty cannot be imposed. The penalty levied stands set aside."
The situation in the present case is still better as no fault has been found with the particulars submitted by the assessee in its Return." [Emphasis supplied] iv) 393 ITR 1 (Del) Pr. CIT v. Neeraj Jindal v) 348 ITR 306 (SC) Price Waterhouse Coopers (P) Ltd. v. CIT vi) 292 ITR 11 (SC) T.Ashok Pai v. CIT
The term 'inaccurate particulars' is not defined. Furnishing of an assessment of value of the property may not by itself be furnishing of inaccurate particulars. Even if the Explanations are taken recourse to, a finding has to be arrived at having regard clause (a) of Explanation I that the Assessing Officer is required to arrive at a finding that the explanation offered by an assessee, in the event, he offers one was false. He must be found to have failed to prove that such explanation is not only bona fide but all the facts relating to the same and material to the income were not disclosed by him. Thus, apart from his explanation being not bona fide, it should be found as of fact that he has not disclosed all the facts which was material to the computation of his income.
The explanation having regard to the decision of this Court must be preceded by a finding as to how and as to in what manner he furnished the particulars of his income. It is beyond any doubt or dispute that for the said purpose the Income-tax Officer must arrive at its satisfaction in this behalf CIT v. Ram Commercial Enterprises Ltd. [2000] 246 ITR 568 (Delhi) and Diwan Enterprises v. CIT [2000] 246 ITR 571 (Delhi),
The order imposing penalty is quasi-criminal in nature and, thus. burden lies on the department to establish that the assessee had concealed his income. Since burden of proof in penalty proceedings varies from that in the assessment proceeding, a finding in an assessment proceeding that a particular receipt is income cannot automatically be adopted, though a finding in the assessment proceeding constitute good evidence in the penalty proceeding. In the penalty proceedings, thus, the authorities must consider the matter afresh as the question has to be considered from a different angle.
It is now a well-settled principle of law that the more is the stringent law, more strict construction thereof would be necessary. Even when the burden is required to be discharged by an assessee, it would not be as heavy as the prosecution P.N. Krishna Lal v. Government of Kerala 1995 Suppl. (2) SCC 187.
The omission of the word "deliberate", thus, may not be of much significance.
Section 271(1)(c) remains a penal statute. Rule of strict construction shall apply thereto. Ingredients of imposing penalty remains the same. The purpose of the Legislature that it is meant to be deterrent to tax evasion is evidenced by the increase in the quantum of penalty, from 20 per cent under the 1922 Act to 300 per cent in 1985.
22. "Concealment of income' and 'furnishing of inaccurate particulars' carry different connotations. Concealment refers to deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi.
The question came for consideration of this Court yet again in K.C. Builders v. Asstt. СІТ [2004] 265 ITR 562, wherein it was held:
"One of the amendments made to the abovementioned provisions is the omission of the word deliberately from the expression 'deliberately furnished inaccurate particulars of such income. It is implicit in the word 'concealed that there has been a deliberate act on the part of the assessee. The meaning of the word 'concealment as found in Shorter Oxford English Dictionary, third edition, Volume I, is as follows:
"In law, the intentional suppression of truth or fact known, to the injury or prejudice of another.
Mere omission from the return of an item of receipt does neither amount to concealment nor deliberate furnishing of inaccurate particulars of income unless and until there is some evidence to show or some circumstances found from which it can be gathered that the omission was attributable to an intention or desire on the part of the assessee to hide or conceal the income so as to avoid the imposition of tax thereon." vii) 100 taxmann.com 103 (Guj) PCIT vs. Gruh Finance Ltd. affirmed by dismissal of SLP in Diary No. 34494 of 2018 reported in 100 taxmann.com 104
"Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal. Ahmedabad dated 29th September 2017 raising the following question for our consideration:
"Whether the Appellate Tribunal has erred in law and on facts in deleting the penalty of Rs. 1.08.41,183/ under section 271 [1](c) of the Act as levied by the CIT [A]?"
2. As can be seen, the issue pertains to penalty under Section 271 [1](c) of the Income-tax Act, 1961 which the Tribunal had deleted. The quantum additions pertain to disallowance of interest expenditure under Section 14A of the Act read with Rule 8D of the Income-tax Rules, 1962
We do not find any evidence of assessee not disclosing the income or source of income which would give rise to penalty proceedings under Section 271[1](c) of the Act. The Tribunal, of course, has proceeded on somewhat different reasons, nevertheless, we see no reason to pursue further the penalty proceedings.
dated 2.7.2014 Rekhi Holding (P) Ltd. vs. ITO
5. We have heard both the sides on the issue. The assessee is a company which debited expenditure under the head legal & professional Rs. 1,05,979/-, vehicle running & maintenance Rs.1,40,362/-, office maintenance Rs.1,94,760/- and rent expenses Rs.2,40,000/- totaling to Rs.6,81,101/-. It is a fact that for maintaining a company, certain office and legal expenses are necessary. The Assessing Officer disallowed whole of the amount. CIT(A) also confirmed the disallowance. Hon'ble ITAT directed to disallow proportionately. Thus, there is no specific finding that certain expenditure was directly related to or incurred for earning the non-taxable income in the form of dividend income. In absence of any specific finding, it shall be wrong to presume that assessee has furnished inaccurate particulars of income. For levying penalty under Section 271(1)(c), the conditions under Section 271(1)(c) must exist before levy of penalty. When particulars have been submitted and Revenue has not pinpointed any discrepancy or direct relation between the exempt income and expenditure incurred, then, in our considered view, it is difficult to presume that assessee has furnished inaccurate particulars of income. Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt.Ltd. (supra) has considered similar issue and held that in such a situation, assessee has not been found guilty for filing inaccurate particulars or for concealing the income. The relevant portion of Hon'ble Supreme Court's judgment is reproduced below:-
6. Considering all these facts of the case as well as the decision of Hon'ble Supreme Court, we set aside the orders of authorities below and allow the assessee's appeal.
-4191/D/2013 dated 6.6.2014 Espire Infolabs (P) Ltd. vs. ITO
"5. We have heard the arguments of learned DR and perused relevant material placed before us. From a perusal of the assessment order, we find that the Assessing Officer asked the assessee why the disallowance should not be made under Section 14A read with Rule 8D. In response to this query, the assessee has submitted that the assessee had made some investment of surplus funds in the mutual funds and equity shares. The assessee has not incurred any administrative or interest expenditure for managing such investment. The expenses claimed in the profit & loss account have no relation with the earning of dividend income. However, the Assessing Officer did not accept the assessee's contention but computed the disallowance under Section 14A read with Rule 8D. In our opinion, merely because certain disallowance is made under Section 14A rejecting the assessee's contention that no disallowance is called for would not be sufficient to levy the penalty under Section 271(1)(c). There is no allegation of the Revenue that the assessee furnished any details which are found to be false or inaccurate. Merely because some disallowance is computed as per the formula prescribed under Rule 8D, it cannot be presumed that the assessee has concealed the income or furnished inaccurate particulars of income. While taking this view, we derive support from the decision of
6. The facts in the case of M/s Espire Infrastructure Corporation Ltd. are identical. In this case, the Assessing Officer made a disallowance under Section 14A read with Rule 8D at 3,20,962/- and levied penalty of 99,177/-. Since the facts are identical, for the detailed discussion in the earlier part of this order, we cancel the penalty levied under Section 271(1)(c).
dated 2.8.2024 Rukmani Wires Pvt. Ltd. vs. DCIT
11. Since, we have already held that provisions of section 115QA of the Act per se cannot be made applicable to the facts of the instant case, the provisions of section 10(34A) also consequentially would not have any application. Hence, the very basis of denial of carry forward longterm capital loss per se made by the Id AO is legally incorrect. Since the assessee had not challenged the same in the quantum proceedings, the penalty u/s 271(1)(c) of the Act stood levied on the assessee. As we have already held that the denial of long-term capital loss per se is not sustainable in the eyes of law, there cannot be any alleged furnishing of inaccurate particulars thereon. In any event, this is only question of interpretation of law of the relevant provisions of the Act as all the details for determination of long- term capital loss either for its acceptance or denial are already available on record before the Id AO in the income tax computation sheet itself. Hence, it cannot be construed as furnishing of inaccurate particulars of income by the assessee. At best, it could be construed only as an incorrect claim. Hence, no penalty could be levied on an incorrect claim. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro Products Private Limited reported in 322 ITR 158 (SC) and Price Waterhouse Coopers (P) Ltd. Vs. CIT reported in 348 ITR 306 (SC).
12. In view of the aforesaid observations and respectfully following the judicial precedents relied upon herein above, we direct the id AO to delete the penalty levied u/s 271(1)(c) of the Act. Accordingly, ground Nos. 1, 4, 6 and 7 raised by the assessee are hereby allowed."
xi) 179 taxmann.com 421(Mumbai- Trib.) dated 13.10.2025 Bharatkumar Jaishinh vs. ITO (pages 1-5 of JPB) dated 27.9.2024 IIFL Samasta Finance Ltd. Vs. DCIT (pages 17-44 of JPB) dated 22.01.2025 Mr. Nateshan Sampath Vs. DCIT (pages 45-56 of JPB) xvi) 214 ITD 426 (Ahmedabad Trib.) dated 26.8.205 Snehalkumar Bhogilal Trivedi vs. NFAC (pages 57-60 of JPB) dated 26.9.2025 M/s Redington Distribution Pte Ltd. Vs. DCIT (pages 68-82 of JPB)
21 It is therefore prayed that penalty levied may kindly be deleted.
FURTHER SINCE THE FINDING THAT "THIS CASE WAS DISCUSSED WITH THE ADDL. CIT, CENTRAL RANGE-1, DELHI FROM TIME TO TIME AND THE ORDER IS PASSED WITH THE PRIOR APPROVAL OF THE ADDL. COMMISSIONER OF INCOME TAX, CENTRAL RANGE-1, DELHI IS NOT IN ACCORDANCE WITH LAW AND THEREFORE PENALTY LEVIED IS ILLEGAL AND INVALID. Infact no such approval has been enclosed with the order dated 7.3.2024 u/s 270A of the Act and therefore the same is vitiated.
It is also well settled law that alleged approval is a mechanical approval is otherwise not a valid approval. Reliance is placed on the following judgments:
SUPREME COURT
79 ITR 603 (SC) Chhugamal Rajpal vs. S. P. Chaliha and Others ii) 237 Taxman 378 (SC) v. S. Goyanka Lime & Chemical Ltd
HIGH COURT (Del) Pr. CIT vs M/s N.C. Cables Ltd. ii) 333 ITR 237 (Del) Central India Electric Supply Co. Ltd. vs ITO 258 ITR 317 (Del) United Electrical Co. P. Ltd. vs. CIT iv) 319 ITR 221 (Del) Shipra Srivastava vs. ACIT v) 338 ITR 51 (Del) Signature Hotels (P) Ltd. vs. ITO vi) 231 Taxman 73 (MP) CIT v. S. Goyanka Lime & Chemical Ltd. affirmed by the Apex Court in the case of CIT. reported in 237 Taxman 378 vii) 218 ITR 730 (MP) CIT v. Man Mohan Das viii) 400 ITR 397 (Chattisgarh) Maruti Clean Coal & Power Ltd. vs. ACIT ix) 267 ITR 716 (P&H) Mohinder Singh Malik vs. CCIT ix) 128 ITR 326 (Cal) East Cost Commercial Co. Ltd. v. ITO x) 287 ITR 494 (Bom) German Remedies Ltd. v. DCIT xi) (1994 Tax L.R. 468) Cal Kamala Properties v. ACIT
24 In view of the aforesaid submissions, it is prayed that penalty upheld by the learned Commissioner of Income Tax (Appeals) be deleted and appeal of the appellant company be allowed.”
4.1. The Ld. DR relied on the orders of the authorities below levying penalty under Section 270A of the Act.
We have heard the parties and perused the entire materials available on record. The first and foremost stand of the assessee is that notices issued under Section 274 read with Section 270A of the Act are vague and illegal as they do not speak about the specific charge in as much as under which clause of Section 270A(2) the assessee has under-reported its income neither the amount of alleged under-reporting of income has been determined in the notice. Conditions of Section 270A(3) to Section 270A(5) of the Act also remain un-complied with. Ld. counsel has relied upon various judgments of different Forums. After perusing different notices issued under Section 274 read with Section 270A of the Act dated 19.11.2019; 08.05.2020; 31.07.2021; 05.09.2021; 28.02.2022 and 23.02.2023, specific charge, whatsoever has been mentioned against the assessee nor the amount of alleged under-reporting of income has been determined. Thus, the entire proceeding is found to have been vitiated as proceedings cannot be continued on the basis of invalid as well as vague notice without mentioning the specific charge against the assessee.
5.1 The next contention raised on behalf of the assessee is that the turnover was inadvertently declared excessive in the Service Tax Return by the assessee. The crux of the reply dated 6.11.2019 appearing at pages 159-160 of the paper book is reproduced herein below:
“Dated: 06.11.2019 Before Asst. Commissioner of Income Tax Circle 5(1) Delhi In the matter of: Brij Gopal Construction Company Private Limited (PAN: AADCB77021) Subject: Assessment proceedings u/s 143(3) of the Income Tax Act, 1961. (Α.Υ. 2017-18) Sir, This is in reference to notice no. ITBA/AST/F/143(3)(SCN)/2019- 20/1019665631(1) dated 01.11.2019 issued u/s 143(3) of the Act for furnishing of required details/documents/information. In response thereto, under the instructions of the captioned assessee, point-wise reply is submitted as under: a. Point 1:
During the year under consideration, Assessee was having total turnover of Rs. 1047,91,99,131. We are attaching herewith the all detailed documentary evidences of all different turnovers along with the 'Reconciliation of books Turnover with Service Tax Return' as Annexure-1 & 2. b. Point 2: It is submitted that the valuation of the shares was done in accordance with the provision of section 56(2) (viib) of the Act r.w.r 11UA(2) of the Income Tax Rules, 1962 based on the net assets of the assessee as on 31.03.2016. Further, it is submitted that calculation of FMV of unquoted equity shares of the assessee as per section 56(2)(viib) read with Rule 11UA(2) has already been furnished in point no. 12(d) of reply dated 23.10.2019.
We hope you will find the same in order and in sufficient compliance to your requirements Should your goodself require any further details/documents/information. Assessee shall be more willing to furnish the same. Thanking You Yours faithfully (CA. Pruney Singla) Counsel for the assessee Encl: Annexure 1 to 2.
5.2 The main thrust of submission is that the turnover was mistakenly shown less in the month of May which has been shown more than the same amount in the month of October in order to nullify the impact. In fact the turnover was mistakenly shown more by Rs. 5,43,930/- in the month of March which was added by the Assessing Officer. It was further submitted that the audited balance sheet of the assessee has duly been accepted by the Learned AO but due to the service tax return where though some genuine mistake cropped up the same was rejected. It is submitted that in initiating the impugned penalty proceedings the Ld. AO has opinion the penalty proceedings and quantum proceedings are independent and distinct and the finding in quantum though relevant are not conclusive or determinative of the penalty proceedings. Thus, considering the totality of the facts and circumstances of the instant case, we find that the Revenue has not been able to prove that the assessee had under-reported its income for A.Y. 2017-18 which could attract the levy of penalty u/s 270A of the Act, more so, the notice issued to the assessee is also found to be vague which cannot be held to be sufficient to initiate the impugned proceedings against the assessee. Thus, the entire penalty proceeding is void ab initio and penalty of 94,122/- levied under Section 270A of the Act is hereby quashed.
In the result, assessee’s appeal is allowed.
Order pronounced in open court on 28.11.2025.