2023 (11) TMI 288 - HC - Income Tax

Penalty levied u/s 270A - misreporting of income un/s 270A(8) and 270A(9) - assessee had sold the land along with his brother for the sale consideration over and above amount as per registered sale documents - AO concluded that this unaccounted cash receipts were shared by the assessee and his brother had worked out the LTCG - Tribunal deleted penalty levy - HELD THAT - As per ITAT income assessed was not greater than the income determined in return processed u/s. 143(1)(a) - As per provisions of section 270A(3)(i)(a) of the Act as there was no difference between the amount of income assessed and amount of income determined u/s. 143(1)(a) of the Act, there was no case of under reporting of income as per provisions of section 270A(2) and (3) of the Act. With regard to misreporting of income as per provisions of section 270A(9), the Tribunal observed that the case of the assessee does not fall in any of the clauses specified at (a to f). Neither any misrepresentation of suppression of facts has occurred nor there was any false entries in the books of accounts as mentioned in various clauses of 270A(9). During the year under consideration search was carried out at the premises of the third party where from on the basis of seized documents the assessee's on-money transactions were found. These transactions were duly offered for taxation by the assessee and his brother in their return of income filed u/s. 139 - Since the return of income was not due as on the date of search carried out on 10.08.2016 and the accounting year was not ended also therefore the books of accounts were not up-dated. Therefore, the assessee's case does not fall under the category of misreporting of income. Tribunal therefore held that the provisions of Section 270A(9) are inapplicable as it is neither the case of misreporting of income nor the case of under reporting of income. No substantial question of law.

Summary

Issues involved:
The judgment involves a challenge under Section 260A of the Income Tax Act, 1961 regarding the deletion of penalty levied under Section 270A of the Act for misreporting of income.

Summary:

Issue 1: Misreporting of income under Section 270A of the Act
The appeals arose challenging the order of the Income Tax Appellate Tribunal regarding the penalty levied under Section 270A of the Act. The case involved unaccounted cash receipts from land sale transactions, leading to the assessment of under-reported income by the Assessing Officer. The Appellate Tribunal confirmed the order of the CIT(A) deleting the penalty, stating that the conditions specified in Section 270A could not be invoked as there was no under-reporting of income. The Tribunal found that the income assessed was not greater than the income determined, and the case did not fall under the provisions of misreporting of income as specified in Section 270A(9).

Issue 2: Applicability of Section 270A(9)
The Tribunal observed that the case did not fall under any clauses specified in Section 270A(9) for misreporting of income. The search conducted at a third party's premises revealed on-money transactions, which were duly offered for taxation by the assessee and his brother. Since the return of income was not due at the time of the search, and the accounting year had not ended, the books of accounts were not updated. Therefore, the Tribunal held that the provisions of Section 270A(9) were inapplicable as there was neither misreporting nor under-reporting of income.

Outcome:
The High Court dismissed the appeals, stating that no substantial question of law arose for consideration. The Tribunal's decision regarding the inapplicability of Section 270A for misreporting or under-reporting of income was upheld, leading to the dismissal of the appeals.