PREMJEET SINGH,DABHA NAGPUR vs. ITO WARD 5(3), NAGPUR

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ITA 521/NAG/2024Status: DisposedITAT Nagpur26 December 2024Bench: SHRI V. DURGA RAO (Judicial Member)4 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found the assessee's explanation for the deductions to be bona fide and that all material facts were disclosed. Therefore, the penalty levied under section 270A was deleted.

What were the facts?

The assessee claimed deductions under sections 10(14)(i) and 10(14)(ii) for commuting expenses. The Assessing Officer disallowed these expenses and levied a penalty under section 270A. The CIT(A) confirmed the penalty.

What were the issues?

Whether the penalty under section 270A for underreporting of income is leviable when the assessee has disclosed all material facts and provided a bona fide explanation for the deductions claimed.

Which sections of the Income-tax Act were involved?

Section 10(14)(i),Section 10(14)(ii),Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR

Before: SHRI V. DURGA RAO & SHRI K.M. ROY, ACCOUNTANT, MEMBER

For Respondent: Shri Abhay Y. Marathe

Date of Hearing – 17/12/2024 Date of Order – 26/12/2024

O R D E R PER V. DURGA RAO, J.M.

The present appeal has been filed by the assessee challenging the impugned order dated 04/07/2027, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2020–21.

2.

In its appeal, the assessee has raised following grounds:–

“That on the facts the learned commissioner of income tax erred in levying penalty of Rs 428476, which is 200% of the total tax payable and it is very harsh. The assessee had paid total income tax payable under the order passed by assessing officer under section 147.”

3.

Facts in brief are that the assessee is an employee with Distribution Logistics Infrastructure Pvt. Ltd. and his salary for the year under 2 Premjeet Singh consideration was ` 30,31,050, including arrears of salary and return of income was filed on time. Subsequently, the assessee received notice under section 143(2) of the Act on account of allowances of expenses under section 10(14)(i) and 10(14)(ii) of the Act, and such allowance of expenses were reflected in the return of income filed by the assessee. The assessee, in response to the notice issued by the Assessing Officer, furnished his submissions in support of the claim which are reproduced below:–

“We are in receipt of show cause notice no. ITBA/AST/ F/143(3) (SCN)/2021- 22/1040246785(1) dated 02 Mar 2022. We respectfully submit the below response to the same. Gross Salary of Rs. 32,57,784/- for F.Y 2019-20 has been fully disclosed in Original as well as revised ITR. The deductions u/s 10(14) (i) and u/s 10(14) (ii) against arrears salary received was claimed to the best of our knowledge and judgment. However, we have no technical knowledge of the tax provisions and case laws as referred by you. On basis of general understanding of the term City compensatory allowance we have claimed the cost of fuel and depreciation and related costs for commuting to the office which was not paid separately by the company. The company has paid us for visiting the clients but not for commuting to office. We agree with the proposed adjustment and accept the same for the best interest of the department. However, we hereby request to waive any penalty u/s 270A since we have disclosed full facts and figures and have not kept any facts and figures hidden from you. Also, we missed fling Form 10E during ITR fling and claimed all deductions under section 10, which again could have resulted in arrears relief us 89(1) My Employer has not released my balance salary (F&F) due to the pendency of this assessment notice. Request you to please release the final order for completion and closure of this case A show cause notice purposing the above stated variations (additions) to the total income of the assessee was issued on 17.08.2022 affording an opportunity of being heard on 23.08.2022. In response thereto the assessee has submitted We agree to the proposed variation as per your SCN dated 17/08/2022 reff no ITBA/AST/F/143(3)(SCN)/2022- 23/1044677981(1) a. Addition of Rs 1,85,210/- to the total income which has been claimed as exempted by the assessee u/s 10(14)(i) of Income Tax Act, 1961 b. Addition of Rs 4,98,040/- to the total income which has been claimed as exempted by the assessee u/s 10(14)(ii) of Income Tax Act, 1961 Please do the needful and close the assessment. Please waive off tax/interest payable if any. Since full TDS has been already deducted."

4.

The Assessing Officer, considering the submissions of the assessee, issued show cause notice proposing additions of ` 1,85,210 and ` 4,98,040

3 Premjeet Singh aggregating to ` 6,83,250. In response, the assessee agreed to the proposed variation. Hence, the Assessing Officer disallowed the above expenses of ` 6,83,250, which was added to the total income of the assessee. Resultantly, the Assessing Officer levied penalty under section 270A of the Act for ` 4,28,476.

5.

On appeal, the learned CIT(A) confirmed the penalty levied by the Assessing Officer.

6.

We have heard the rival contentions, perused the materials available on record and gone through the orders of the authorities below. It is noted that during the quantum assessment, the Assessing Officer estimated the disallowance for underreporting assessee’s income. Therefore, the Assessing Officer has initiated penalty proceedings under section 270A of the Act for such underreported income. Pursuant to that the Assessing Officer issued show cause notice calling explanation from the assessee as to why penalty need not be levied for underreporting of income, the assessee submitted all the details before the Assessing Officer and also explained the reason for such alleged underreporting of income. However the Assessing Officer went ahead and levied penalty of ` 4,28,476, under section 270A of the Act. This impugned action of Assessing Officer levying penalty cannot be accepted. We taking note of the explanation of the assessee, are satisfied that the explanation given by the assessee during penalty proceedings is bona fide and find that the assessee has disclosed all the material facts to substantiate the explanation offered and therefore, we are of the view that this is not a fit case for levy of penalty for underreporting of income. Therefore, the penalty

4 Premjeet Singh made by the Assessing Officer and confirmed by the learned CIT(A) is directed to be deleted. Accordingly, all the grounds raised by the assessee are allowed.

7.

In the result, appeal filed by the assessee is allowed. Order pronounced in the open Court on 26/12/2024

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