The Income Tax Appellate Tribunal (ITAT) recently held that levy of 100% of tax sought to be evaded under section 271AAA of Income Tax Act is not typographical error.
Section 271AAA Income Tax Act 1961 says that penalty levied in case of failure to keep and maintain information and documents related to international transactions
section 271(1)(c) of the Income Tax Act 1961 provides that if the assessing officer while the proceedings found that any person furnished any inaccurate particulars of income assessing officer may levy penalty for that act.
Assessees M/s. Fahmida International Pvt Ltd filed the appeal against the order of the Commissioner Of Income Tax Appeal for the assessment year 2009-10 against the confirmation of penalty levied under section 271(1)(c) of the Income Tax Act 1961.
Sunil Mishra counsel for the assessee contented that search in the case of the assessee took place the specified period 2009-10 for purpose of levying the penalty, if at all, was under section 271AAA of the Income Tax Act 1961 and not under section 271(1)(c) of the Income Tax Act 1961.
M.K.Gautam, Counsel for the revenue contented that “a show cause notice had been issued under both the under section 271AAA of the Income Tax Act 1961 and section 271(1)(c) of the Income Tax Act 1961 and it was only a typographical error”.
After considering the contentions of the both parties The Division bench of ITAT Cuttack comprising Arun Khodpia, Accountant Member, and George Mathan, Judicial Member, allowed the appeal and observed that The penalty leviable under section 271AAA Income Tax Act 1961 was 10% of the concealed income whereas under section 271(1)(c), the penalty was leviable at 100% of the tax sought to be evaded. But the order of the assessing officer shows that the assessing officer had levied a penalty at 100% of tax sought to be evaded. That could not be held as a typographical error. Further by considering the decision of the S.M.Enterprises the penalty levied under section 271(1) (c) of the Income Tax Act 1961 by the assessing officer and confirmed by the CIT(A) stands was deleted.
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