2023 (4) TMI 561 - AT - Income Tax

Penalty u/s. 270A - Proceedings u/s. 272A(1)(d) - misreporting of the turnover - HELD THAT - Admittedly, there is a suppression of turnover by the assessee while filing her return of income by declaring the income u/s. 44AD of the Act. Section 44AD is a presumptive taxation where 8% of the turnover is taxed as income. It is not acceptable by us that the assessee s Accountant has mis-reported the turnover by reverse working. We are also unable to understand when the profits are declared under presumptive basis, why the Profit Loss Account was prepared showing the same profit as filed under the return of income. Assessee has also not disputed the VAT turnover and the estimation of income on the VAT turnover by the Ld. AO. CIT(A)-NFAC has rightly determined that the assessee has misreported the turnover attracting the penal provisions u/s. 270A of the Act and hence confirmed the penalty u/s. 270A of the Act levied by the Ld. AO. We therefore find no infirmity in the order of the Ld. CIT(A)-NFAC and hence no interference is required. Accordingly, the grounds raised by the assessee in this regard are dismissed.

Summary

Issues:
Assessment under Section 44AD of the Income Tax Act, 1961 for AY 2017-18; Penalty proceedings under Section 270A initiated by the Assessing Officer; Appeal before the Ld. CIT(A)-NFAC challenging penalty imposition; Appeal before the Tribunal against the order of the Ld. CIT(A)-NFAC.

Assessment under Section 44AD:
The assessee filed her return of income for AY 2017-18 admitting a total income of Rs. 3,76,650 under Section 44AD of the Income Tax Act, 1961. The case was selected for scrutiny regarding "cash deposits during the year." The Assessing Officer (AO) found discrepancies between the turnover declared in the return and the turnover shown in VAT returns. The AO estimated income at 8% of the turnover declared in VAT returns, making an addition of Rs. 13,91,096. The AO also initiated penalty proceedings under Section 270A due to non-compliance with notices and discrepancies in reporting.

Penalty Proceedings under Section 270A:
The AO levied a penalty of Rs. 4,44,130 under Section 270A. The assessee contended that the turnover discrepancy was a mistake made by her Accountant, and there was no misreporting in the return of income. The Authorized Representative argued that the turnover was wrongly declared at Rs. 58,22,000, and the Profit & Loss Account reflected the correct profit as per VAT returns. However, the Departmental Representative argued that the turnover suppression was willful, and the Profit & Loss Account was an afterthought. The Ld. CIT(A)-NFAC upheld the penalty, stating that the assessee misreported the turnover, attracting penal provisions under Section 270A.

Appeal Before the Tribunal:
The assessee appealed before the Tribunal challenging the order of the Ld. CIT(A)-NFAC. The Tribunal observed that there was a suppression of turnover by the assessee while filing the return under Section 44AD. The Tribunal noted discrepancies in the reporting and upheld the penalty imposed by the AO. The Tribunal found no infirmity in the order of the Ld. CIT(A)-NFAC and dismissed the appeal filed by the assessee.

In conclusion, the Tribunal upheld the penalty imposed under Section 270A, stating that the assessee misreported the turnover, leading to discrepancies in income declaration. The Tribunal found no grounds for interference and dismissed the appeal.