ITAT rules No Penalty u/s 270A for Misreporting Income Due to Correct Filing and Tax Payment [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT)  ruled that no penalty under Section 270A of Income Tax Act,1961, for misreporting income was applicable due to correct filing and tax payment.

Suresh Rao,appellant-assessee,did not file his return for AY 2018-19. He worked as a salaried employee at Tata Power Company Ltd. A substantial amount was credited to his account during FY 2014-15, as shown in TDS statements under Section 192. Based on information suggesting income had escaped assessment, a show-cause notice was issued to him, followed by a notice under Section 148 on 30.03.2022.

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The assessee filed his return on 14.12.2022, declaring an income of Rs. 26,89,600/-, which was accepted in the assessment. However, due to non-filing and short deduction of tax (Rs. 2,62,362/-), a penalty under Section 270A was levied for mis-reporting income. The assessee's appeal before the Commissioner of Income Tax(Appeals)[CIT(A)] was rejected, leading to an appeal before the Tribunal.

The assessee's counsel said that in response to the notice under Section 148, the return was filed, and taxes were deducted on the regular salary. However, the employer missed deducting TDS of Rs. 2,62,362/- on the extra salary. Once the assessee realized the short deduction, the return was corrected and filed.

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The revenue counsel argued that the return wouldn’t have been filed without the notice. In reply, the assessee's counsel pointed out that the return was filed, and taxes were paid, so no penalty should apply.

Section 270A(9) of the Act, outlines cases of misreporting of income, including misrepresentation of facts, failure to record investments or receipts, claiming unsubstantiated expenses, and recording false entries.

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The two-member bench comprising Dr.BRR Kumar(Vice President) and Siddhartha Nautiyal (Judicial Member)  reviewed the facts on record. After considering the facts,including the filing of the return and payment of all taxes, it concluded that no penalty under Section 270A for misreporting of income was applicable in this case.

In short,the appeal filed by the assessee was allowed.

To Read the full text of the Order CLICK HERE

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