2023 (12) TMI 582 - AT - Income Tax

Penalty levied u/s 270A - mis-reporting of income - penalty at 200% levied - assessee reply to SCN not accepted - HELD THAT - In the draft assessment order, the Assessing Officer has proposed additions to be made and the assessee has accepted the proposed addition and paid the taxes. Further, against the show-cause notice issued under section 270A of the Act, the assessee has furnished the reply, which was considered by the Assessing Officer, but was not accepted. On perusal of the penalty order, we find that the AO has not recorded what the reply was furnished by the assessee against the show-cause notice issued u/s 270A of the Act and why it was not acceptable. Moreover, the Assessing Officer has mentioned any reason for levying penalty at 200%. AO has simply recorded that 200% of penalty has been levied for the tax payable on mis-reporting of income. When the assessee has furnished his explanation in response to the show-cause notice, it is the duty of the Assessing Officer to consider and record as to why the reply is not acceptable. However, in the penalty order, the Assessing Officer has not discussed anything and simply stated that the reply of the assessee is considered and is not acceptable is not correct. We are of the opinion that the penalty order passed by the Assessing Officer and confirmed by the ld. CIT(A) cannot survive. Thus, the penalty levied under section 270A of the Act stands deleted. Assessee appeal allowed.

Summary

Issues:
The case involves a penalty under section 270A of the Income Tax Act, 1961 for misreporting of income.

Assessee's Income Disclosure:
The assessee, an individual with salary income, initially filed the return of income declaring gross salary income and claimed deductions. Upon scrutiny, it was found that the assessee had not disclosed additional income received from another source. The Assessing Officer issued a show-cause notice and the taxes were paid promptly by the assessee.

Penalty Imposition:
Subsequently, a penalty notice under section 270A of the Act was issued to the assessee for misreporting income. The Assessing Officer, after considering the reply from the assessee, levied a penalty of 200% of the tax payable. The penalty was confirmed by the ld. CIT(A).

Appeal and Tribunal Decision:
The assessee appealed to the Tribunal, arguing that the penalty should be deleted as the Assessing Officer did not adequately consider the assessee's reply in the penalty order. The ld. DR contended that penalty was justified due to the non-disclosure of rental and interest income. The Tribunal noted that the penalty order did not provide reasons for not accepting the assessee's reply or for imposing a 200% penalty. It was held that the Assessing Officer failed to properly consider and record the reasons for the penalty imposition. Therefore, the penalty under section 270A of the Act was deleted, and the appeal of the assessee was allowed.

Conclusion:
The Tribunal, after careful consideration of the facts and circumstances, found that the penalty order lacked adequate reasoning and justification. Consequently, the penalty levied under section 270A of the Income Tax Act was set aside, and the appeal of the assessee was allowed.