Penalty u/s 270A(9)(a) can not be levied on adhoc additions – ITAT

Penalty u/s 270A(9)(a) can not be levied on adhoc additions – ITAT

In a recent judgment, ITAT Hyderabad has held that penalty u/s 270A(9)(a) can not be levied on adhoc additions.

ABCAUS Case Law Citation:
ABCAUS 4159 (2024) (07) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) National Faceless Appeal Centre (NFAC in confirming penalty levied by the Assessing Officer (AO) u/s 270A of the Income Tax Act, 1961 (the Act).

During the assessment proceeding u/s 143(3) of the Act, the AO did not identify any specific discrepancy in the assessee’s books of account. However, the AO made adhoc addition and  on such adhoc addition the AO levied penalty u/s 270A(9)(a).

Before the Tribunal the assessee contended that as per the provisions of section 270A(9)(a) of the Act that no penalty u/s.270A(9)(a) of the Act can be levied on adhoc additions. He further submitted that penalty u/s.270A(9)(a) of the Act can be levied only in case of misrepresentation or suppression of facts. However, in the case of the assessee the AO did not pointed out any misrepresentation or suppression of facts. Hence the AR prays that the penalty be deleted.

The Tribunal opined that as rightly submitted by the assessee, no discrepancy had been pointed out by the AO during the assessment proceedings u/s 143(3) of the Act in assessee’s books of account. However, the AO made the addition on adhoc basis and levied penalty u/s 270A(9)(a) of the Act on such addition.

The Tribunal noted that from the plain reading of the aforesaid section, it is abundantly clear that penalty u/s 270A(9)(a) of the Act can be levied only in case of misrepresentation or suppression of facts on the part of the assessee. However, in the case of the assessee no such misrepresentation or suppression of facts had been identified by the AO. Further no specific discrepancy had been noticed by the AO in his order u/s 143(3) of the Act.

Therefore, the Tribunal opined that the case of the assessee does not cover u/s.270A(9)(a) of the Act and hence no penalty u/s.270A(9)(a) of the Act can be levied on the assessee. Under these circumstances, the penalty levied by the Ld. AO was not sustainable.

Therefore, the Tribunal quashed the penalty order. 

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