2024 (4) TMI 1248 - AT - Income Tax

Penalty u/sec.270A(8) and (9) - non-disclosure of interest income during the course of quantum assessment amounted to under reporting of the total income - HELD THAT - We find no reason to sustain the impugned penalty for the precise reason that although the legislature has stipulated specific clauses (a) and (f) to sub-sec.(9); to be read with sub-sec.(8) of sec.270A lower authorities have no where pinpointed as to which limb the assessee had committed it s default attracting under-reporting as a consequence of mis-reporting . That being the case not only hon ble jurisdictional high court s recent Full Bench landmark decision in Mohd. Farhan A.Shaikh 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB) has held that such a failure on the Assessing Officer s part indeed vitiates the entire penal proceedings in old scheme but also the very principle applies qua this new scheme of sec.270A applicable w.e.f. 01.04.2017 for assessment year 2017-2018 onwards as per Schneider Electric South East Asia (HQ) Ltd. 2022 (3) TMI 1295 - DELHI HIGH COURT We thus accept the assessee s instant sole substantive grievance in very terms to conclude that the learned lower authorities have not specified the corresponding limb in their respective orders. Assessee appeal allowed.

Summary

The Appellate Tribunal ITAT Pune reviewed the Revenue's appeal concerning the assessment year 2017-2018, which challenged the National Faceless Appeal Centre's decision regarding proceedings under Section 270 of the Income Tax Act, 1961. The case involved a 200% penalty imposed on the assessee for not disclosing interest income of Rs.21,84,353, which was considered "under-reporting" due to "misreporting" under Section 270A(8) and (9) of the Act. The Revenue, represented by Shri Ramnath P. Murkunde, argued the penalty was justified due to the non-disclosure.However, the Tribunal, led by Judicial Member Satbeer Singh Godara, found no justification for the penalty. The Tribunal noted that the lower authorities failed to specify which clause under sub-section (9), read with sub-section (8) of Section 270A, was violated by the assessee. This omission was significant, as highlighted by the jurisdictional high court's decision in Mohd. Farhan A. Shaikh Vs. ACIT [2021] 434 ITR 1 (Bom), which invalidated penal proceedings due to such failures. The Tribunal also referenced Schneider Electric South East Asia (HQ) Ltd. vs. ACIT [2022] 443 ITR 186 (Delhi), affirming this principle under the new scheme of Section 270A applicable from 01.04.2017. Consequently, the Tribunal allowed the assessee's appeal, concluding that the penalty was unsustainable due to the lack of specification by the lower authorities. The order was pronounced in open court on 24.04.2024.