2023 (7) TMI 649 - AT - Income Tax

Levy of penalty u/sec. 270A - under-reporting in consequence of misreporting of income - fraudulent refund by increasing deductions and reducing his taxable income - HELD THAT - Assessee who has a history for habitually claiming fraudulent refund by increasing deductions and reducing his taxable income since A.Y. 2016-17 onwards, could not justify why he has continuously misreported his income and what was the legal basis for such an action and no plausible legal explanations were submitted why such misreporting was done by the assessee. It is obvious that this is a fraud committed against the Department in order to evade tax. We hold that NFAC has rightly upheld the levy of penalty by the AO @200% for misreporting of income as defined u/sec. 270A(9) - we do not find any infirmity with the findings of the NFAC which is upheld. Grounds of appeal stands dismissed.

Summary

Issues Involved:
1. Confirmation of levy of penalty u/s 270A for under-reporting and misreporting of income for A.Y. 2017-18 and A.Y. 2018-19.

Summary:

Issue 1: Confirmation of levy of penalty u/s 270A for A.Y. 2017-18

The assessee filed an original return declaring an income of Rs. 4,22,340/- which was processed u/s 143(1) and a refund was issued. However, upon reopening the case u/s 148, it was revealed that the assessee had suppressed the gross total income by Rs. 3,20,000/- and overstated deductions under Chapter VI-A by Rs. 85,000/-. The assessee did not provide any explanation for these discrepancies during the appellate proceedings before NFAC. Consequently, the AO initiated penalty proceedings u/s 270A for under-reporting and misreporting of income, ultimately levying a 200% penalty for misreporting as defined u/s 270A(9). The NFAC upheld this penalty, noting the assessee's failure to disclose material facts and the habitual nature of fraudulent claims.

Issue 2: Confirmation of levy of penalty u/s 270A for A.Y. 2018-19

Similarly, for A.Y. 2018-19, the original return declared a gross total income of Rs. 7,46,015/- which was later found to be understated by Rs. 1,80,000/- in the return filed in response to notice u/s 148. Additionally, Chapter VI-A deductions were inflated by Rs. 1,55,000/-. The assessee failed to provide any explanation for these discrepancies. The NFAC determined this to be a case of misreporting of income as defined u/s 270A(9), justifying the 200% penalty levied by the AO.

Conclusion:

The Tribunal upheld the NFAC's decision to confirm the levy of penalty u/s 270A for both A.Y. 2017-18 and A.Y. 2018-19, dismissing the assessee's appeals. The Tribunal emphasized that the assessee's actions constituted misreporting of income, warranting the higher penalty as prescribed by law.

Order:

Both appeals of the assessee are dismissed.