2024 (8) TMI 163 - AT - Income Tax

Penalty u/s 270A - assessee has failed to justify the difference of receipt as reported in ITR and as reflected in Form 26AS - considering the same to be fees for technical services provided to Indian companies, AO made addition - AO also observed that as the assessee has under reported its income which is in consequence of misreporting thereof - HELD THAT - We find substance in this argument as assessment order and penalty order are both silent on these submissions and, at the same time, make specific mention that no submissions were made. AR has also argued on the fact that the penalty notice is not a valid notice as there is no specific allegation of the fact of which misrepresentation was made or the fact which was suppressed for the purpose of specific limb of section 270A(9) of the Act. We are of considered view that this alone is sufficient to set aside the penalty. As during hearing it also transpired that in fact, subsequently the Form 26AS stands rectified and the alleged discrepancy no more exists on record. As findings in the assessment cannot be regarded as conclusive for the purpose of the penalty proceedings and before a penalty can be passed or sustained entirety of the circumstances must be taken into account for which we rely Hon ble Supreme Court judgment in case of Anantharam Veerasinghaniah Co. 1980 (4) TMI 2 - SUPREME COURT - So taking notice of the explanation submitted along with subsequent developments of rectification of Form 26AS, we are inclined to allow the grounds.

Summary

The appeal was against a penalty order under section 270A of the Income Tax Act for the assessment year 2018-19. The appellant's income was under scrutiny due to a discrepancy in income reported in Form 26AS. The penalty was challenged, arguing that the discrepancy was due to another entity's tax deduction error. The AO did not consider submissions explaining the discrepancy, leading to the penalty being set aside. The Form 26AS was later rectified, leading to the appeal being allowed and the penalty order quashed.