PRASHANT BALASAHEB KAGE,NASHIK V. INCOME TAX OFFICER, NASHIK

ITA 2021/PUN/2024

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The case involves Prashant Balasaheb Kage, a salaried employee, who appealed against a penalty imposed for underreporting his income due to misreporting by his tax consultant. The Assessing Officer had initially accepted the revised income declared in response to a notice under section 148 of the Income Tax Act but later imposed a penalty for underreporting. The Tribunal found that the assessee was not aware of the misreporting and had acted in good faith by relying on his tax consultant. The Tribunal's decision was influenced by similar cases and precedents where penalties were deleted under comparable circumstances.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474183 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Other Referred Cases: Shashikant Sukdeo Ambekar in ITA No.365 & 366/PUN/2023, Annasaheb Namdeo Gunjal vs ITO Nashik in ITA No.182/P/2024, Deepak Bhikha vs ITO Nashik in ITA No.685/PUN/2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND DESAI
• Keywords: TDS
• Section: 147; 148; 133A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.2021/PUN/2024 िनधाᭅरण वषᭅ / Assessment Year : 2017-18 Prashant Balasaheb Kage, ITI Housing Colony, Pethe Nagar Road, Indira Nagar, Nashik- 422009. PAN : AJCPK5366L Vs. ITO, National Faceless Assessment Centre, Delhi. Appellant Respondent आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 31.10.2023 passed by Ld. CIT(A)/NFAC for the assessment year 2017-18. 2. The appellant has raised the following grounds of appeal :- “1. The learned Commissioner of Income Tax is not justified in levying penalty u/s 270A of Rs.1,08,470/- on the ground that the assesse had underreporting of income in consequence of misreporting his income. In consequence of misreporting without appreciating that the said levy of penalty was not justified in law. 2. The learned Commissioner of Income Tax failed to appreciate that before the Commissioner of Income Tax, the assesse had Assessee by : None Revenue by : Shri Arvind Desai Date of hearing : 08.01.2025 Date of pronouncement : 21.02.2025 ITA No.2021/PUN/2024 2 duly explained that under reporting of income in his case was attributable to wrong action of tax consultant and all the material facts relating thereto along with substantiating evidences in form of complaint filed against Tax Consultant before Economic Wing of Police Department etc. were also furnished by the assesse and therefore, the levy of penalty u/s 270A without rebutting the explanation offered by the assesse was not justified in view of provisions of the said Act. 3. The learned Commissioner of Income Tax ought to have appreciated that the bona fides of the explanation offered by assesse were established from the fact that the assesse, being salaried employee from technical background, was totally dependent upon the tax consultant for filing income tax return and therefore, the levy of penalty u/s 270A was not justified in view of the explanation offered by the assesse.” 3. Facts of the case, in brief, are that the assessee is an individual salaried employee filed return of income for the assessment year 2017-18 declaring taxable income of Rs.4,05,650/- after claiming various deductions of Rs.2,42,420/- under Chapter VI-A. The Assessing Officer, on the basis of information received from the Income Tax Officer, (Investigation) Nashik, that the assessee has claimed excess deductions, initiated proceeding u/s 147 of the IT Act after obtaining approval from the authorities & accordingly, a notice u/s 148 was issued. The assessee furnished return of income in response to notice u/s 148 of the IT Act, declaring taxable income of Rs.7,24,000/- after claiming deductions under Chapter VI-A. The assessment was completed u/s 147 r.w.s. 144B of the IT Act on 21.09.2021 by accepting the income returned in response to notice ITA No.2021/PUN/2024 3 u/s 148 of the IT Act. Subsequently, vide order dated 15.03.2022 the Assessing Officer imposed penalty of Rs.1,08,470/- u/s 270A(8) of the IT Act for underreporting of income in consequence of misreporting. 4. After considering the reply of the assessee, Ld. CIT(A)/NFAC dismissed the appeal and confirmed the penalty of Rs.1,08,470/- imposed u/s 270A(8) of the IT Act. It is this order against which the assessee is in appeal before this Tribunal. 5. When the present appeal was called for hearing, none appeared on behalf of the assessee, neither any application for adjournment was filed despite due service of notice. Therefore, we proceed to decide the appeal on the basis of material available on record & after hearing Ld. DR. 6. Ld. DR submitted before us that the appellant has not filed correct return of income voluntarily & therefore the appellant is liable for penalty. It was therefore requested by Ld. DR to confirm the penalty order passed by AO & sustained by Ld. CIT(A)/NFAC. 7. We have heard Ld. DR & perused the material available on record. From the statement of facts, we find that the assessee is a salaried employee of CEAT Limited & belongs to technical background. The return of most of the employees of CEAT LTD, ITA No.2021/PUN/2024 4 Bosch Company, HAL & M & M including that of the assessee was filed by a tax consultant namely Kishor Patil. We further find that the assessee came to know from other employees in company that Mr. Kishor Patil with his expertise is able to legally calculate lower tax, resulting in refund of TDS deducted by employer. The assessee was unaware about the contents of the Income Tax Return filed by Kishor Patil & truly believed that the returns are filed legally as per the provisions of the Income Tax Act. The assessee being from technical background does not understand ABCD of Income Tax & therefore completely relied on the above named tax consultant, who without informing him & others, claimed excess deduction under chapter VI-A of the IT Act & claimed refund. It was Kishor Patil who cheated all the employees & claimed excess deduction in their returns without informing them for his own benefit. The fact of the cheating came in light when a survey u/s 133A was conducted at the premises of Mr Kishor Patil. When the fact that this kind of fraud was made in the name of number of persons all of them complaint to the Economic Offence Wing of Police Nashik, against the tax consultant Kishore Patil. The news regarding fraud committed by Kishore Patil also flashed in the daily news paper of Nashik. It is also apparent that there is no mistake of the assessee but it was the ITA No.2021/PUN/2024 5 hidden interest of the tax consultant who triggered the gun by using shoulders of the assessee & many more for his own benefit. It is also found that as soon as the fact of excess deduction claimed, came to the knowledge of the assessee he immediately contacted another genuine tax consultant who prepared and furnished correct return in response to the notice u/s 148 of the IT Act & paid the due tax with interest, even before the issue of notice u/s 148 of the IT Act. We find that the Assessing Officer has levied penalty u/s 270A(8) of the IT Act of Rs.1,08,470/- on the basis of the fact that the correct income was not returned voluntarily but only after issue of notice u/s 148 of the IT Act. It is also found that when the notice u/s 148 was issued the appellant has disclosed his correct income & paid the due tax before issue of notice. We also find that the Assessing Officer has accepted the return as it is which was furnished by the appellant in response to the notice u/s 148 of the IT Act. We cannot accept the contention of Ld. DR that the revised return was not voluntary therefore the penalty u/s 270A of the Act is inevitable. From the perusal of penalty order, it appears that the penalty u/s 270A was initiated for the assessment year under consideration and subsequently penalty of Rs.1,08,470/- u/s 270A(8) was imposed for underreporting of income as a ITA No.2021/PUN/2024 6 consequence of misreporting. In this regard, we find that prior to imposition of penalty a notice to show-cause – why an order imposing penalty u/s 270A should not be passed, was issued to the assessee but the particular clause (‘a’ to ‘f’) of sub-section (9) of section 270A of the IT Act was not mentioned. Even in the penalty order only section 270A(8) has been mentioned but the relevant clause of subsection 9 was not mentioned. In such kind of situation, we find support from the decision of Co-ordinate Bench of this Tribunal in the case of Shashikant Sukdeo Ambekar in ITA No.365 & 366/PUN/2023 dated 20-07-2023 wherein under identical facts and similar circumstances the Tribunal has deleted the penalty u/s 270A by observing as under : - “8. In the case under consideration, the AO has failed to identify the specific Clauses from Clause (a-f) of section 270A(9) of the Act. Therefore, respectfully following ITAT Pune and ITAT Mumbai decisions the AO is directed to delete the penalty under section 270A of the Act. Accordingly, grounds of appeal raised by the assessee are allowed.” 8. Respectfully following the above decision passed by the Coordinate Bench of this Tribunal (supra) & also in the light of other decisions passed by coordinate Pune Benches Pune in the case of Annasaheb Namdeo Gunjal vs ITO Nashik in ITA No.182/P/2024 order dated 21-10-2024 & in the case of Deepak ITA No.2021/PUN/2024 7 Bhikha vs ITO Nashik in ITA No.685/PUN/2024 order dated 21-10-2024 wherein similar penalty was directed to be deleted, we direct the AO to delete the penalty of Rs.1,08,470/- imposed u/s 270A(8) of the IT Act. Thus, the grounds of appeal raised by the assessee in the present appeal are allowed. 9. In the result, the appeal of the assessee is allowed. Order pronounced on 21st day of February, 2025. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 21st February, 2025. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “B” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "