The Income Tax Appellate Tribunal (ITAT) Delhi bench deleted the penalty of Rupees 132 crore imposed on Jaypee Cement for misreporting of income by the tax auditor in the tax return.
Assessee Jaypee Cement is engaged in the business of manufacturing and sale of cement, manufacturing and sale of asbestos sheets, heavy engineering workshop and foundry. Assessee’s assessment was completed under section 143(3) of Income Tax Act by declaring loss of Rs. 4,49,80,57,749/-.
In the return, the assessee claimed deduction under Section 32AC of the Income Tax Act in the sum of Rs. 225,03,97,246/- which is the gross amount of investment in new plant or machinery as against its claim of 100% deduction under Section 32AC of the Income Tax Act.
Thereafter the assessee noted that the assessee had underreported or misreported its income to the extent of Rs. 191,28,37,659/-. Due to this reason AO initiated penalty proceedings under Section 270A of the Income Tax Act.
Aggrieved by the order assesee filed appeal before CIT(A), who dismissed the appeal.Against the order assessee filed appeal before the tribunal .
On behalf of the assessee, Ajay Vohra, counsel argued that excess claim of deduction under Section 32AC of the Income Tax Act was suo moto withdrawn by the assessee due to inadvertent mistake committed by the Tax Auditor in the tax audit report,
Further the counsel for assessee submitted that as per Section 270A of the Income Tax Act, penalty was proposed to be levied for following two defaults:-
a) Misreporting of income
b) Underreporting of income.
Thus, in cases of misreporting of income are covered under Section 270A(9) of the Income Tax Act.However assessee‘s case does not fall under any of the clauses mentioned in Section 270A(9) of the Income Tax Act and hence no penalty could be levied on the assessee for misreporting of income.
Waseem Arshad, Counsel for Revenue supported the decision of the assessing officer.
During the proceedings the tribunal observed that the assessee had indeed claimed deduction under section 32AC of the Income Tax Act @100% value of investment in new plant and machinery in the return of income based on the figure mentioned thereon in tax audit report by the Tax Auditor.
When Assesee notice the mistake in return but the time limit for revised return was expired so assessee voluntarily withdrew the excess claim of deduction under Section 32AC of the Income Tax Act.
Further, it was noted that the assessee also enclosed a certificate from the Tax Auditor wherein, Tax Auditor had duly admitted inadvertent mistake that had been committed in the tax audit report and also certified the correct figure of claim of deduction under Section 32AC of the Income Tax Act to be Rs. 33,75,59,587/- onl
After considering the facts and circumstance , the two member bench of M. Balaganesh (Accountant Member) and Saktijit Dey, (Vice President) observed that assessee‘s case would squarely fall under the exception provided under Section 270A(6)(a) of the Income Tax Act wherein, the assessee had given its bona fide explanation and had disclosed all the material facts that are relevant for the explanation offered.
Therefore the bench deleted the penalty imposed by the assessing officer.
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