Penalty Penalty under Section 270A can be Saved in Bona fide Cases

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The Tax Publishers Income Tax--Penalty Penalty under Section 270A can be Saved in Bona fide Cases Akhilesh Kumar Sah Penalty is not compulsory in each and every case. A reasonable action of an assessee can save the imposition of penalty. Many cases have been decided in respect of section 271(1)(c) of the Income Tax Act, 1961 and also being decided in respect of section 270A. 1. Introduction Recently, in Greenwoods Govt. Officers Welfare Society v. DCIT [ITA No 609/Del/2023 (AY: 2018-19)] decided by ITAT Delhi on 26-10-2023, provisions of section 270A of the Income Tax Act, 1961 (for short, 'the Act') have been taken before deletion of penalty. 2. Facts of the above mentioned case in brief The assessee, being a society registered under the Society Registration Act, 1860 was incorporated on 26-2-1987, had filed its return online for assessment year 2018-19 declaring income at Rs Nil. Its case was selected for scrutiny under CASS. Statutory notice(s) were issued/served upon the assessee in response to which requisite details were submitted. During the assessment proceedings, Assessing Officer (for short, 'AO') observed that assessee earned interest during the year which it claimed as exempt. On query, the assessee submitted that it had initially filed ITR with Nil income. Assessee was offering interest income for tax and filed the revised computation. The assessee also stated that it had opted for DTVSV Scheme which was announced in the Budget 2020 as 'No Dispute but Trust Scheme' to settle pending disputes relating to direct taxes. It was stated that the assessee made declaration under scheme by filing Forms 1 & 2 for getting relief from pending dispute cases and furnished details thereof. The assessee stated that it had revised its return for assessment year 2018-19 and offered interest for tax and deposited the tax. AO added the said interest to the income of the assessee with the observation that assessee offered said interest to tax after notice under section 142(1) of the Act was issued to it. AO added miscellaneous and other income and completed the assessment on total income under section 143(3)/144B of the Act. AO initiated penalty proceedings under section 270A of the Act for under-reporting of income. In response to show cause notice, the assessee vide letter stated that it was a regular tax payer and was unaware that interest income earned by was not exempt till assessment in its case for assessment year 2013-14 was completed wherein the same was disallowed. The assessee opted for DTVSV Scheme for 3 years to wind up the tax liability. It had not intentionally under-reported, or misreported income and had voluntarily revised the return during the assessment proceedings and paid taxes. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--Penalty

Penalty under Section 270A can be Saved in Bona fide Cases

Akhilesh Kumar Sah

Penalty is not compulsory in each and every case. A reasonable action of an assessee can save the imposition of penalty. Many cases have been decided in respect of section 271(1)(c) of the Income Tax Act, 1961 and also being decided in respect of section 270A.

1. Introduction

Recently, in Greenwoods Govt. Officers Welfare Society v. DCIT [ITA No 609/Del/2023 (AY: 2018-19)] decided by ITAT Delhi on 26-10-2023, provisions of section 270A of the Income Tax Act, 1961 (for short, 'the Act') have been taken before deletion of penalty.

2. Facts of the above mentioned case in brief

The assessee, being a society registered under the Society Registration Act, 1860 was incorporated on 26-2-1987, had filed its return online for assessment year 2018-19 declaring income at Rs Nil. Its case was selected for scrutiny under CASS. Statutory notice(s) were issued/served upon the assessee in response to which requisite details were submitted. During the assessment proceedings, Assessing Officer (for short, 'AO') observed that assessee earned interest during the year which it claimed as exempt. On query, the assessee submitted that it had initially filed ITR with Nil income. Assessee was offering interest income for tax and filed the revised computation. The assessee also stated that it had opted for DTVSV Scheme which was announced in the Budget 2020 as 'No Dispute but Trust Scheme' to settle pending disputes relating to direct taxes. It was stated that the assessee made declaration under scheme by filing Forms 1 & 2 for getting relief from pending dispute cases and furnished details thereof. The assessee stated that it had revised its return for assessment year 2018-19 and offered interest for tax and deposited the tax. AO added the said interest to the income of the assessee with the observation that assessee offered said interest to tax after notice under section 142(1) of the Act was issued to it. AO added miscellaneous and other income and completed the assessment on total income under section 143(3)/144B of the Act. AO initiated penalty proceedings under section 270A of the Act for under-reporting of income.

In response to show cause notice, the assessee vide letter stated that it was a regular tax payer and was unaware that interest income earned by was not exempt till assessment in its case for assessment year 2013-14 was completed wherein the same was disallowed. The assessee opted for DTVSV Scheme for 3 years to wind up the tax liability. It had not intentionally under-reported, or misreported income and had voluntarily revised the return during the assessment proceedings and paid taxes.