SHRI POPAT KARBHARI BHALERAO,NASHIK vs. INCOME TAX OFFICER, WARD-2(1), NASHIK, NASHIK

ORDER

PER DR. DIPAK P. RIPOTE, AM:

“1. The learned CIT-(A) erred in confirming the penalty u/s 270A of Rs.2,60,874 levied by the A.O without appreciating that the said levy of penalty was not justified on facts and in law.

Submission of ld.AR : 2. The ld.Authorised Representative(ld.AR) for the assessee invited our attention to penalty order dated 30.12.2021 passed under section 270A of the Act. The ld.AR explained that the Assessing Officer(AO) has levied penalty under section 270A(9)(e) of the Act. The ld.AR explained that the sub-clause (e) & 1324/PUN/2023 Shri Popat Karbhari Bhalarao [A] is for failure to record any receipt in books of accounts. However, in the case of assessee, in the assessment order, the AO has disallowed assessee’s claim of Chapter-VIA deduction and has disallowed deduction claimed under section 24. Therefore, penalty has been levied under wrong section and hence it is not maintainable.

Submission of ld.DR : 3. The ld.Departmental Representative(ld.DR) for the Revenue relied on the order of the AO & ld.CIT(A).

Findings & Analysis : 4. We have heard both the parties and perused the records. In this case, in the assessment order dated 04.09.2021 passed under section 147 r.w.s 144 of the Act the AO has disallowed the assessee’s claim of deduction under section 24 of Rs.2,00,000/- and Chapter-VIA deduction of Rs.3,52,000/- as false claims. No other addition is made in the assessment order. However, in the penalty order, the AO has invoked section 270A(9)(e) of the Act for levying penalty. The Section 270A(9)(e) is reproduced here as under : [Penalty for under-reporting and misreporting of income. & 1324/PUN/2023 Shri Popat Karbhari Bhalarao [A]

270A. (1) The Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner may, during the course of any proceedings under this Act, direct that any person who has under-reported his income shall be liable to pay a penalty in addition to tax, if any, on the under-reported income. ……………….. 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; (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” 4.1 Thus, Sub-section 9(e) is for failure to record any receipt in books of accounts. However, in the case of the assessee, there is no such failure to record any receipt in the books of assessee. The addition is on account of disallowance of certain deductions claimed under Chapter-VIA and Section 24 of the Act. Therefore, AO has levied penalty under incorrect section. Therefore, the penalty is not-maintainable. Hence, we direct the AO to delete the penalty of Rs.2,60,874/- levied under section 270A(9)(e) of the Act. Accordingly, appeal of the assessee is allowed.