ASIF HUSSAIN SHAH SAYAD,MUMBAI V. INT TAX WARD 4(2)(1), MUMBAI

ITA 3094/MUM/2024

AI Insights

The case involves Asif Hussain Shah Sayad, a non-resident individual, who appealed against a penalty imposed by the Income Tax Department under section 270A for alleged underreporting of income in the Assessment Year 2017-18. The penalty was initially levied following a reassessment under section 148, despite the assessee having declared the income from a property sale and paid the corresponding taxes at a reduced rate of TDS. The Assessing Officer and the CIT(A) upheld the penalty, leading to the appeal at the Tribunal. The Tribunal's decision to delete the penalty was based on the finding that the assessee had not underreported any income and had complied with all tax obligations.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470998 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 06-06-2024
• Other Referred Cases: Parulben Vijaykumar Patel vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM KRISHN KEDIA
• Assessee Lawyers: MONA MAKWANA
• Keywords: Transfer pricing; International transaction; Bonafide belief; Capital Gains; TDS; FORM 26AS
• Section: 147; 148; 139

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SMT. BEENA PILLAI, JM & SHRI OMKARESHWAR CHIDARA, AM I.T.A. No.3094/Mum/2024 (Assessment Year: 2017-18) Asif Hussain Shah Sayad Flat No. 45, 4th Floor, Silver Arch CHS. Ltd., Khira Nagar, S. V. Road, Santacruz West, Mumbai- 54. PAN : HDGPS7131J Vs. Income Tax Ward 4(2)(1) Mumbai- 400021. Appellant) : Respondent) Appellant /Assessee by : Ms. Mona Makwana Revenue / Respondent by : Shri Ram Krishn Kedia (SR. D.R.) Date of Hearing : 24.09.2024 Date of Pronouncement : 30.10.2024 O R D E R Per Beena Pillai, JM: Present penalty appeal is filed by the assessee against order dated 26/04/2024 passed by learnt CIT (A)-58, Mumbai for Assessment Year 2017-18 on following grounds of appeal: Page | 2 ITA No.3094/MUM/2024 Asif Hussain Shah Sayad; A. Y.2017-18 1. “On the facts and circumstances of the case, the learned Assessing Officer and CIT(A) has erred while passing the penalty order u/s 270A dated 28.07.2023 and have levied penalty of Rs.8,06,343/-. Requesting Your Honour, to delete the additions made to the Total income of the 2. On the facts and Circumstances of the case, the order passed by the learned AO under s. 270A of the Act is bad-in-law and the learned CIT(A) erred in upholding the same particularly when he has accepted the returned income as disclosed in return of income filed under s. 148 of the Act, and hence there is neither misreporting of income nor under reporting of income vis-a-vis the return filed by the appellant. It is submitted that it be so held now and the penalty of Rs.8,06,343/- confirmed under s. 270A of the Act be deleted. 3. On the facts and Circumstances of the case, the order passed by the learned AO and upheld by the learned CIT(A) is bad-in-law as in any case, the case of the appellant did not fall under any of the criteria as envisaged under s. 270A(9) of the Act and hence the penalty should not be levied upon the Appellant under s. 270A of the Act for misreporting of income. It is submitted that it be so held now and the penalty of Rs. 9,92,946 levied under s. 270A(8) of the Act as confirmed by the learned CIT(A) be deleted. 4. Your appellant reserves the right to add, alter, amend and/or withdraw any of the above grounds of appeal.” Brief facts of the case are as under: 2. The assessee is a non-resident individual and had no other income other than capital gain on sale of property at Santa Cruz West, for the purposes of executing the transaction of sale of property, the assessee applied for lower rate of TDS by filing form 13 under section 197 of the act. Accordingly vide certificate dated 29/12/2016 bearing certificate number 0216 GG 077F the income tax officer after being satisfied issued a certificate to deduct TDS at 14.92% for the transaction. Page | 3 ITA No.3094/MUM/2024 Asif Hussain Shah Sayad; A. Y.2017-18 2.1. The assessee was therefore under the bonafide belief that there is no need to file any return of income under section 139 of the act. Subsequently, the Ld. AO reopened the assessment by issuing notice under section 148 of the act on 28/07/2022. In response to the notice under section 148, the assessee filed its return of income on 13/08/2002 declaring total income of Rs.78,28,580 that included the sale proceeds of the property amounting to Rs.1,05,00,000/-. The assessing officer passed the assessment order dated 28/01/2023 wherein, the return filed by the assessee was duly accepted without any modifications or further enquiries and the assessment was completed based on the declared income by the assessee. 2.2. Thereafter the assessee was in receipt of penalty initiated under section 270 A of the act, alleging underreporting of income. In response to notice issued, assessee alleged that no additional tax was to be paid on any income in the assessment order. It was also submitted that, the Ld. AO did not find or discover any income that was underreported or not reported and all the taxes have been paid based on the certificate issued by the assessing officer to deduct TDS at lower rate. The Ld. AO however was of the opinion that the assessee did not declare capital gains income, amounting to Rs.78,28,586/-by filing return of income, and therefore the assessee was issued notice under section 147 of the act. Page | 4 ITA No.3094/MUM/2024 Asif Hussain Shah Sayad; A. Y.2017-18 2.3. The Ld. AO thus submitted that the penalty proceedings initiated under section 270A of the act was for underreporting of income and thus levied penalty of 50% of the tax payable on such underreported income. Aggrieved by the order of the Ld. AO, the assessee preferred appeal before the Ld. CIT(A) upheld the addition of the Ld. AO. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal. 3. The Ld.AR at the outset submitted that all the issues contested by the assessee is on one single issue of levy of penalty under section 271 A without application of mind. 3.1. The Ld.AR submitted that, the assessment was done on the basis of the return income filed by the assessee and the same stands accepted. It is submitted that there cannot be question of under reporting. The Ld.AR submitted that, purchases of the property had deducted TDS under section 194 IA of the act, and the same was reflecting in form 26AS of the assessee on the website of the IT portal. It was submitted that, the assessee was under bonafide belief that, since taxes was deducted at source on sale of property, there was no further requirement to file return of income and the department was in complete knowledge regarding the sale of the property. It was submitted that, TDS deducted and deposited Page | 5 ITA No.3094/MUM/2024 Asif Hussain Shah Sayad; A. Y.2017-18 at the rate of 14.92% and low tax deduction certificate was submitted to the assessing authority, as well as Ld.CIT(A). 3.2. The Ld.AR submitted that, the present facts of the case does not satisfy the requirement for levy of penalty under section 270A for underreporting and misreporting of income as per sub clause 7, 8, 9. The Ld.AR placed reliance on the decision of Hon’ble Ahmedabad Tribunal in case of Parulben Vijaykumar Patel vs. ITO reported in (2024) 38 NYPTTJ 646 in support. 3.3. On the contrary, the Ld.DR relied on the orders passed by the authorities below. We have perused the submissions advanced by both sides in the light of records placed before us. 4. Section 270A of the act, specifies penalty for underreporting and misreporting that reads as under: “270A. Penalty for under reporting and misreporting of 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 Page | 6 ITA No.3094/MUM/2024 Asif Hussain Shah Sayad; A. Y.2017-18 specified domestic transaction, to which the provisions of Chapter X apply.” 5. We note that, in the assessment order, penalty is not initiated as the returns filed by the assessee stood accepted. It is noted that no addition is made by the Ld.AO as against the returns filed by the assessee in lieu of notice issued under section 148 of the act. In the present facts of the case, it is also noted that, the taxes paid/deposited stands reflected in Form 26AS as per the Short deduction certificate issued by the revenue authorities. It is not the case of the revenue that there is a case of tax evasion by the assessee. All the taxes paid by the assessee are accepted by the revenue. Therefore the present facts of the case do not qualify for imposing penalty under section 270A of the Act for mis-reporting or under reporting. Respectfully following the decision of Hon’ble Ahmadbad Tribunal in case of Parulben Vijaykumar Patel vs. ITO (supra), we direct the penalty to be deleted. Accordingly the grounds raised by the assessee stands allowed. In the result the appeal filed by the assessee stands allowed. Order pronounced in the open court on 30-10-2024. Sd/- Sd/- (OMKARESHWAR CHIDARA) (BEENA PILLAI) Accountant Member Judicial Member Page | 7 ITA No.3094/MUM/2024 Asif Hussain Shah Sayad; A. Y.2017-18 30.10.2024 *SK, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. 5. Guard File CIT BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai "