Income Tax Act, 1961, Section
270A(9)(e)
Penalty under section 270A(9)(e)--Leviability--No failure on part of assessee to
record any receipt in books of account
Conclusion: Since there was no failure on the part of assessee to record any receipt
in his books of account, penalty under section 270A(9)(e) was not leviable.
AO levied penalty under section 270A(9)(e). CIT(A)
confirmed the said penalty. Assessee contended that sub-clause (e) of section
270(9) is for failure to record any receipt in books of account, however, in
his case, AO disallowed deductions claimed under Chapter-VIA and section 24,
therefore, penalty was levied under wrong section and hence it was not
maintainable. Held: In assessment order, AO disallowed
assessee's claim of deduction under section 24 and Chapter-VIA deduction as
false claims and no other addition was made. However, in penalty order, AO
invoked section 270A(9)(e) for levying penalty. Sub-section 9(e) of section
270A is for failure to record any receipt in books of account. However, in case
of assessee, there was no such failure to record any receipt in books of
account. Additions were made was on account of disallowances of certain
deductions claimed under Chapter-VIA and section 24. Therefore, AO levied
penalty under incorrect section and hence, penalty levied under section
270A(9)(e) was deleted.
Decision: In
assessee's favour
IN THE ITAT, PUNE BENCH
S.S. GODARA, J.M. & DIPAK P. RIPOTE, A.M.
Popat Karbhari Bhalerao v. ITO
ITA Nos. 1323 & 1324/PUN/2023
26 March, 2024
Assessee by: Sanket Joshi
A.R.
Revenue by: Sourabh Nayak
Addl. CIT (D.R.)
Dipak P. Ripote, A.M.
This is an appeal filed by the assessee against the order
of learned Commissioner (Appeals)(NFAC) for assessment year 2017-18 dated
2-9-2022 under section 250 of the Income Tax Act, 1961, emanating from penalty
order under section 270A of the Act, dated 30-12-2021. The assessee raised the
following grounds of appeal:
1. The learned Commissioner
(Appeals) erred in confirming the penalty under section 270A of Rs. 2,60,874
levied by the assessing officer without appreciating that the said levy of
penalty was not justified on facts and in law.
2. The assessee submits that in
the reassessment order, the assessing officer has initiated penalty under
section 270A on a vague charge of 'furnishing inaccurate particulars of income'
also in the notice under section 274 read with section 270A, the exact limb of
section 270A(9) which has been allegedly violated by the assessee has not been
specified and hence, the penalty order passed under section 270A inconsequence
of such illegal notice may be declared as null and void in law.
3. The learned Commissioner
(Appeals) failed to appreciate that the underreporting of income in this case
was attributable to wrong actions of the tax consultant who had misguided large
number of salaried taxpayers like the assessee by filing incorrect ITRs and
this fact was also substantiated by police complaints filed against the said
tax consultant subsequently and therefore, the levy of penalty under section
270A was also not justified on merits.
4. The appellant craves leave to
add/ alter/ amend any of the grounds of appeal.
Submission of learned Authorized Representative:
2. The learned Authorized
Representative (ld. A.R.) for the assessee invited our attention to penalty Order
dated 30-12-2021 passed under section 270A of the Act. The learned
Authorized Representative explained that the assessing officer (AO) has levied
penalty under section 270A(9)(e) of the Act. The learned Authorized
Representative explained that the sub-clause (e) is for failure to record any
receipt in books of accounts. However, in the case of assessee, in the
assessment order, the assessing officer has disallowed assessee's claim of
Chapter-VIA deduction and has disallowed deduction claimed under section 24.
Therefore, penalty has been levied under wrong section and hence it is not
maintainable.
Submission of learned Departmental Representative:
3. The learned Departmental
Representative (ld. D.R.) for the Revenue relied on the order of the assessing
officer & learned Commissioner (Appeals).
Findings & Analysis:
4. We have heard both the
parties and perused the records. In this case, in the assessment Order dated
4-9-2021 passed under section 147 read with section 144 of the Act the
assessing officer has disallowed the assessee's claim of deduction under
section 24 of Rs. 2,00,000 and Chapter-VIA deduction of Rs. 3,52,000 as false
claims. No other addition is made in the assessment order. However, in the
penalty order, the assessing officer has invoked section 270A(9)(e) of the Act
for levying penalty. The section 270A(9)(e) is reproduced here 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
may, 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.
..
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
4.1 Thus, sub-section 9(e)
is for failure to record any receipt in books of accounts. However, in the case
of the assessee, there is no such failure to record any receipt in the books of
assessee. The addition is on account of disallowance of certain deductions
claimed under Chapter-VIA and section 24 of the Act. Therefore, assessing
officer has levied penalty under incorrect section. Therefore, the penalty is
not-maintainable. Hence, we direct the assessing officer to delete the penalty
of Rs. 2,60,874 levied under section 270A(9)(e) of the Act. Accordingly, appeal
of the assessee is allowed.
ITA No.1324/PUN/2023:
5. In the case of the
assessee for assessment year 2018-19 assessing officer has levied penalty of
Rs. 4,10,974 under section 270A(9)(e) of the Act. However, the addition is made
on account of disallowance of Chapter-VIA deduction and deduction under section
24 of the Act.
6. Since we have already
discussed the issue at length and the facts of ITA No. 1323/PUN/2023 are
similar to the facts of ITA No. 1324/PUN/2023, therefore, our decision
in ITA No. 1323/PUN/2023 shall apply mutatis mutandis to this appeal
also, accordingly, grounds of appeal raised by the assessee in ITA No.
1323/PUN/2023 are allowed.
7. In the result, appeal of
the assessee is allowed.
8. To sum up, both appeals
of the assessee i.e. ITA No. 1323 & 1324/PUN/2023 are allowed.
Order pronounced in the open Court on 26-3-2024.