Penalty u/s 270A for misreporting without specifying sub-section deleted by ITAT

Penalty order u/s 270A for misreporting without specifying sub-section deleted by ITAT as cryptic and non-maintainable

In a recent judgment, the ITAT Pune has deleted penalty u/s 270A for misreporting where AO had not specified sub-section of section of 270A of the Income Tax Act 1961.

ABCAUS Case Law Citation:
ABCAUS 4091 (2024) (06) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) NFAC confirming the leavy of penalty for misreporting u/s 270A of the Income Tax Act, 1961 (the Act).

The appellant assessee was an individual salaried employee who had claimed deductions of Rs. 3,10,000/- under Chapter VIA of the Act.

A survey was conducted u/s 133A of the Act in the case of an Income Tax Practitioner (ITP). It was observed during the survey that the said ITP had filed Return of Income of many salaried persons claiming bogus Chapter-VIA deductions and also under reporting income.  The assessee was one of the persons among them whose Return had been filed by the said (ITP).

The Assessing Officer(AO) based on information received from the Investigation issued notice u/s 148 of the Act. In response to which the assessee filed a Revised Return of Income reducing ½ of the deductions claimed under Chapter VIA.

The revised return was accepted by the AO. However, he initiated penalty proceedings u/s.270A(9) of the Act and finally levied a penalty u/s 270A of the Act at 200%.

Before the Tribunal the assessee contended that the said ITP had filed the Return of Income making bogus claims/deductions under Chapter VIA. It was also informed that the assessee and other employees had lodged police complaint against the said ITP.

It was also contended that in the revised return of income filed in response to notice u/s.148 of the Act, Assessee had declared correct income and accordingly there was no addition in the assessment order.

The assessee also argued that the AO had not specified in the penalty order the sub-section of section of 270A of the Act under which penalty has been levied. AO had not specified the limb of Section 270A. In the penalty order, AO had not even discussed how it was mis-reporting.

The Tribunal observed that the penalty order u/s 270A was a cryptic order as the AO had merely reproduced the section 270A of the Act that too without reproducing the relevant sub-sections 6, 7 and 9 of Section 270A of the Act. In the penalty order, the AO had not discussed how it was a case of mis-reporting. AO had not brought on record how assessee has mis-reported the income, whether it was suppression of facts or claim of expenditure not substantiated by any evidence or false entry in books of accounts.

The Tribunal stated that penalty proceedings are independent proceedings of assessment proceedings. In the penalty proceedings, the AO has to satisfy himself that assessee had mis-reported the income.

The Tribunal noted that the AO had passed a “non-speaking” penalty order. There were sub-clauses “a” to “f” of section 270A(9) of the Act. All these sub-clauses are independent of each other. Though AO has levied 200% penalty, but AO had not specified in the penalty order that AO is levying penalty u/s 270A(9) of the Act. The AO had also not identified in the penalty order the sub-clauses of section 270A(9) which were applicable to assessee.  In these facts and circumstances of the case, the penalty was not maintainable.

Accordingly, Tribunal directed AO to delete the penalty order u/s 270A of the Act. 

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