SURESH RAO,AHMEDABAD V. INCOME TAX OFFICER, WARD-2(1)(2), AHMEDABAD

ITA 1235/AHD/2024

AI Insights

The case involves Suresh Rao, a salaried employee of Tata Power Company Ltd., who appealed against a penalty imposed by the Income Tax Officer under section 270A(9) for allegedly misreporting his income for the Assessment Year 2018-19. The penalty was initially confirmed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre. The primary contention was that the assessee had not underreported or misreported his income, and the penalty was unjustified. The Tribunal considered the facts that the assessee had filed his return in response to a notice under section 148 and had paid the due taxes, including TDS deducted by his employer. The Tribunal concluded that the provisions for misreporting of income under section 270A(9) were not applicable, leading to the allowance of the assessee's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25841 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KETAKI DESAI
• Assessee Lawyers: SULABH PADSHAH
• Keywords: Transfer pricing; International transaction; TDS
• Section: 148

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR.BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.1235/Ahd/2024 (Assessment Year: 2018-19) Suresh Rao, Naimesh Bunglaw, Near Meghalaya Avenue, Naranpura, Ahmedabad-380014. Vs. Income Tax Officer, Ward-2(1)(2) Ahmedabad. [PAN No.AXQPR5046Q] Appellant by : Shri Sulabh Padshah, A.R. Respondent by: Ms. Ketaki Desai, Sr. DR Date of Hearing 07.01.2025 Date of Pronouncement 24.01.2025 O R D E R PER: DR. BRR KUMAR, VICE PRESIDENT: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeal)/National Faceless Appeal Centre (NFAC), Delhi, vide order dated 04.04.2024 for the Assessment Year 2018-19. 2. The Assessee has taken the following grounds of appeal:- 1. The Learned CIT (Appeals) has grossly erred in confirming the penalty levied u/s 270A(9) of the Income Tax Act of Rs 12.75.924/- on the ground that the Appellant has misreported his income for the year it is submitted that the Appellant has neither underreported nor misreported his income and thus invoking of provisions u/s 270A(9) of the Act is completely illegal and unjustifiable. In view of this, the impugned penalty levied on account of misreporting of income Rs 12,75,924/- deserves to be deleted. The same be held now (अपीलाथᱮ /Appellant ( ᮧ᭜यथᱮ /Respondent) ITA No.1235/Ahd/2024 Asst.Year 2018-19 - 2– 2. The Learned CIT (Appeals) has erred in facts and on law in confirming the penalty levied on aground that the Appellant has suppress the fact by not filing Original ITR. It is submitted that the Original ITR could not be filed because of bonafide reasons and the Appellant has disclosed and offered full income in ITR filed u/s 148 of the Act duly accepted by Id AO during assessment proceeding On facts and circumstances of the case, the provisions u/s 270A(9) of the Act are not at all attracted in case of Appellant and thus huge penalty levied on account of mis- reporting of income @ 200% of tax liability Rs. 12,75,924/- be deleted in the interest of justice. 3 Without prejudice to the above, the lower authorities have erred in levying and confirming penalty of Rs. 12,75,924/ 200% of total tax liability of Rs 6,37,962/-. It is submitted that the employers of the Appellant had already deducted the TDS of Rs 3,75,600/- towards total tax liability and thus there is neither revenue loss to that extent nor question of underreporting of income or misreporting of income to that extent. In view of this, the maximum penalty be levied only on difference amount of Rs 2,62,362/- and not at all on entire tax liability. The same please be held accordingly. 4. Without prejudice to the above, the Learned CIT (Appeals) has erred in confirming the penalty levied of Rs. 12,75,924/- considering the same as misreporting of income u/s 270A(9) of the Act. It is submitted that in any event the Appellant's case is not at all falling under clause (a) to clause (f) of Sub section 9 of Section 270A and thus there is no question of misreporting of income. In view of this, the maximum penalty be levied in case of Appellant for under reporting of income as provided under Section 270A(7) of the Act and the remaining penalty levied kindly be deleted accordingly. 5. The Order passed by the learned CIT(A) is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now. 6. Your appellant craves leave to add, alter and/or to amend all or any of the grounds before the final hearing of appeal. 3. Facts relevant for adjudication of the core issue are that the assessee did not file his return of income for AY 2018-10. The assessee is a salaried person working in Tata Power Company Ltd. The assessee had been credited substantial amount as reflected from TDS statements u/s.192 during the Financial Year 2014-15. Assessee was issued show-cause as to why a notice u/s.148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant AY 2018-19. Subsequently, notice u/s.148 was issued on ITA No.1235/Ahd/2024 Asst.Year 2018-19 - 3– 30.03.2022 asking the assessee to file return against which the assessee filed return of income 14.12.2022 declaring total income of Rs.26,89,600/- the assessment has been completed accepting the return income. Owing to the non-filing of the return and short deduction of tax of Rs.2,62,362/-. The Assessing Officer initiated and levied penalty u/s. 270A for mis-reporting of the income. The assessee unsuccessfully contested before the Ld. CIT(A) which culminated in filing the appeal before Tribunal. Before us it was submitted by the Ld.AR that in response to notice u/s.148 the assessee had duly filed return of income and the taxes have been deducted by the employee on the regular salary however, the employer did not deduct TDS of Rs. Rs.2,62,362/- on the additional salary paid. It was submitted that having made aware of the short deduction of tax the assessee has promptly rectified and filed the return, hence no penalty is leviable. On the other hand, Ld. DR argued that but for the notice issued u/s.148 the assessee could not have filed the return of income. Rebutting the argument of Ld. DR, the Counsel for the assessee submitted that the return have been filed, the due taxes have been paid, hence no penalty is leviable. 4. We have perused the facts on record. 5. The provision of section 270A(9) reads as under: Section 270A(9) in The Income Tax Act, 1961 “…(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; ITA No.1235/Ahd/2024 Asst.Year 2018-19 - 4– (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…” 6. On going through the provisions of the Act, the factum of filing of return and payment of entire taxes, keeping in view the specific facts and circumstances of the instant case, we have no hesitation to hold that no penalty u/s.270A for mis-reporting of income is leviable in this case. 7. In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 24.01.2025 Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (DR. BRR KUMAR) JUDICIAL MEMBER VICE PRESIDENT (True Copy) Ahmedabad; Dated 24.01.2025 Manish, Sr. PS E COPY आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant ITA No.1235/Ahd/2024 Asst.Year 2018-19 - 5– 2. ᮧ᭜यथᱮ / The Respondent. 3. संबंिधत आयकर आयुᲦ / Concerned CIT 4. आयकर आयुᲦ(अपील) / The CIT(A)- 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडᭅ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad "