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2023 (9) TMI 689 - AT - Income TaxLevy of penalty u/s. 270A - assessee erroneously while filing the VAT returns omitted to include the purchases and the relevant sales - AR further submitted that the purchase invoice was also presented before the Ld. AO which was not considered by the Ld. AO and AO has estimated the disallowance @ 20% on the expenditure claimed by the assessee, thus since the disallowance is an estimated amount, no penalty can be levied U/s. 270A - HELD THAT - We find that the assessee has produced copies of bills for purchases and the sales returns before the Ld. AO which cannot be considered as underreported arising out of the misrepresentation or suppression of facts - we find it deem to be fit to restrict the penalty to 50% of the amount of tax payable on the above underreported income and thereby direct the Ld. AO accordingly. Disallowance of expenditure arising out of estimation, we are of the considered view that once the disallowance is made on estimation basis, no penalty can be levied. Disallowance of expenditure cannot be said to be considered as underreporting of the income. In the instant case, even though the Ld. AO has discussed about the self-made vouchers but has not quantified the same thereby resorting to estimation of 20% of disallowance of expenditure claimed by the assessee. Therefore, the penalty levied by the Ld. AO and confirmed by the Ld. CIT(A)-NFAC on this issue is unsustainable - Decided in favour of assessee. Penalty order u/s. 271B - tax audit report U/s. 44AB of the Act was not filed for the AY 2017-18 at the time of filing of return of income - AR argued that the tax audit report was filed by the assessee through online but while selecting the Assessment Year, the assessee has wrongly selected the AY 2016-17 instead of AY 2017-18 - HELD THAT - We find merit in the arguments of the Ld. AR that the assessee has mistakenly selected the AY 2016-17 instead of selecting the AY 2017-18. Section 271B of the Act can be invoked only if an assessee fails to get its accounts audited in respect of any Previous Year relevant to the Assessment Year. Assessee has wrongly uploaded the Form 3CD by selecting the earlier AY 2016- 17 instead of selecting the AY 2017-18. Hence, we are of the considered view that the assessee has complied with the provisions of section 44AB by getting its accounts audited and therefore the penalty U/s. 271B of the Act cannot be levied in the instant case for failure to upload the tax audit report U/s. 44AB - Decided in favour of assessee.
Issues involved:
The judgment involves issues related to penalty orders passed under sections 270A and 271B of the Income Tax Act, 1961. ITA No. 30/Viz/2023 (AY: 2017-18): The case involved the assessee-firm's failure to include purchases and sales returns while filing VAT returns, resulting in underreported income. The Assessing Officer (AO) levied a penalty under section 270A. The Appellate Tribunal found that the purchases and sales returns were duly accounted for in the books of accounts, and the penalty was reduced to 50% of the tax payable on the underreported income. Additionally, the Tribunal held that penalty for disallowance of expenditure based on estimation cannot be levied. Therefore, the penalty levied by the AO was deemed unsustainable and was directed to be deleted. ITA No. 31/Viz/2023 (AY: 2017-18): This appeal dealt with the non-submission of the tax audit report under section 44AB for the relevant assessment year. The AO initiated penalty proceedings under section 271B, which was upheld by the CIT(A). However, the Appellate Tribunal observed that the audit report was prepared for the correct assessment year but was mistakenly uploaded for the previous year. As the assessee had complied with the audit requirements, the penalty under section 271B was deemed unjustified and was directed to be deleted. Consequently, the appeal of the assessee was allowed. Separate Judgment by Judges: The judgment was delivered by Shri S Balakrishnan, Hon'ble Accountant Member, and Shri Duvvuru Rl Reddy, Hon'ble Judicial Member.
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