9911796707
TMI Blog2023 (6) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... of penalty by the AO u/s 270A of the Act suffers from the vice of non-application of mind as well as violates principles of natural justice. Penalty levied on addition of sustained quantum addition cannot survive. Decided in favour of assessee. - Shri ABY T. Varkey, JM And Shri Om Prakash Kant, AM For the Assessee : Shri Dhaval Shah For the Revenue : Shri Anil K. Das(Sr. AR) ORDER PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Ld. Commissioner Of Income Tax(Appeals)/ NFAC, Mumbai (herein after CIT(A) , dated 23 11 2022 for AY 2017 18, wherein the Ld. CIT(A) was pleased to confirm the penalty levied by AO u/s 270A of the Income Tax Act,1961 (herein after the Act ). 2. Brief facts are that the assessee had filed its return of income for AY 2017- 18 dated 31.10.2017 declaring Rs. 21,21,750/-. Later the case of the assessee was selected for scrutiny under CASS. Thereafter, the AO framed scrutiny assessment u/s 143(3) by order dated 10-12-2019 by making the inter-alia quantum addition of total Rs 3,94,996/- which action was assailed by assessee before the Ld. CIT(A) who was pleased to dismiss the appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Tribunal in quantum proceedings. 3 Interest paid on late payment on TDS 973 4 Disallowance of expenses on estimate basis at 0.6% 2,416 Total..(B) 67,970 Confirmed addition Grand Total (A+B) 3,94,996 According to the Ld. AR, the penalty has been levied erroneously by the AO @ 200% on tax payable alleging misreporting of income which is erroneous and for adjudicating the same, it is gainful to refer to section 270A of the Act which reads as under: - Penalty for under-reporting and misreporting of income 270A. (1) The Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner, during the course of any proceedings under this Act, direct that any person who has under-reported his income shall be liable to pay a penalty in addition to tax, if any, on the under-reported income. (2) A person shall be considered to have under-reported his income, if- (a) the income asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of total under-reported income shall be determined in accordance with the following formula- (A-B)+(C-D) where, A=the total income assessed as per the provisions other than the provisions contained in section 115JB or section 115JC (herein called general provisions): B=the total income that would have been chargeable had the total income assessed as per the general provisions been reduced by the amount of under-reported income: C= the total income assessed as per the provisions contained in section 115JB or section 115JC; D= the total income that would have been chargeable had the total income assessed as per the provisions contained in section 115JB or section 1151C been reduced by the amount of under-reported income: Provided further that where the amount of under-reported income on any issue is considered both under the provisions contained in section 115JB or section 115JC and under general provisions, such amount shall not be reduced from total income assessed while determining the amount under item D. Explanation. For the purposes of this section,- (a) preceding order means an order immediately preceding the order during the course of which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance on the same issue, has included such amount in the computation of his income and has disclosed all the facts material to the addition or disallowance; (d) the amount of under-reported income represented by any addition made in conformity with the arm's length price determined by the Transfer Pricing Officer, where the assessee had maintained information and documents as prescribed under section 92D, declared the international transaction under Chapter X, and, disclosed all the material facts relating to the transaction; and (e) the amount of undisclosed income referred to in section 271AAB. (7) The penalty referred to in sub-section (1) shall be a sum equal to fifty per cent of the amount of tax payable on under-reported income. (8) Notwithstanding anything contained in sub-section (6) or sub-section (7), where under-reported income is in consequence of any misreporting thereof by any person, the penalty referred to in sub-section (1) shall be equal to two hundred per cent of the amount of tax payable on under-reported income. (9) The cases of misreporting of income referred to in sub-section (8) shall be the following, namely:- (a) misrepresentation or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty in as much as the Parliament has not used shall ; and by using the word may in sub-section (i) of section 270A of the Act, its conveys the intention of the Parliament that levy of penalty u/s 270A of the Act is not mandatory. Having said that, the Ld. AR Shri. Dhaval Shah enlightened us about the scheme/arrangement of the provision of section 270A of the Act which is summarized as under:- -Subsection (1) Charging section giving discretionary powers for levy of penalty -Subsection (2)- What items constitute 'underreported income -Subsection (3) - Computation of underreported income -Subsection (4) - Penalty where source of receipts added in earlier years - Subsection (5) - Quantum of underreported income as stated in subsection 4 - Subsection (6) - Certain items not to be considered as underreported income -Subsection (7) - Quantum of penalty at 50% of tax payable on under reported income -Subsection (8) If underreported income as a consequent of misreporting of income then quantum of penalty to be 200% of tax payable on such underreported income. -Subsection (9)-Certain cases of misreporting of income -Subsection (10) - Working of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 200%. Merely mentioning that the appellant has misreported income without bringing out how the additions has lead to misreporting of income, and which specific instance specified under sub-section (8) is attracted, according to him, AO erred in leving Penalty, which action shows total non application of mind and arbitrary use of power to levy penalty. According to him, the AO has passed the penalty order with a pre-determined mind and in a whimsical manner which cannot be sustained in the eyes of law. Per-Contra, the Ld DR supporting the action of Ld CIT(A), defended the action of both authorities and does not want us to interfere in the same. 9. The assessee has challenged the penalty levied under sub-section (9) of section 270A of the Act which is against the misreporting of income as referred in sub-section (8) of section 270A of the Act. The AO has made the addition on account of addition made on these issues as under: - Particulars Addition amount 1 Interest paid on late payment of service tax 3,27,026 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income. 270A. (1) (8) Notwithstanding anything contained in sub-section (6) or sub-section (7), where under-reported income is in consequence of any misreporting thereof by any person, the penalty referred to in sub-section (1) shall be equal to two hundred per cent of the amount of tax payable on under-reported income. (9) The cases of misreporting of income referred to in sub-section (8) shall be the following, namely:- (a) misrepresentation or suppression of facts; (b) failure to record investments in the books of account; (c) claim of expenditure not substantiated by any evidence; (d) recording of any false entry in the books of account; (e) failure to record any receipt in books of account having a bearing on total income; and (f) failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply. 13. The AO has levied the higher penalty of 200% of tax payable of mis-reporting income. Then in such a scenario, the AO has to bring the action/omission on the part of the assessee in the ken of sub-section (9) of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
