The Income Tax Appellate Tribunal (ITAT) Mumbai bench while deleting the penalty imposed under Section 270A Income Tax Act, 1961 observed that no information received was by assessee in respect of interest on income tax refund to tax available at time of filing return of income.
Kavita Jasjit Singh, the taxpayer filed the return of income by declaring a total income of Rs.1,88,68,990. Thereafter the assessee’s case was elected for scrutiny.
During the scrutiny assessment AO observed that assessee had received interest on income tax refund amounting to Rs.9,72,915, which was not considered at the time of filing the return of income.
A notice under section 274 read with section 270A of the Income Tax Act was issued to the assessee. In response, assessee submitted that during the scrutiny assessment proceedings, she had voluntarily offered the interest of income tax refund without any show cause notice being issued on the same and therefore it cannot be considered as an attempt to under-report the income.
Did not agree with the submission of the assessee AO levied penalty due to under-reported income while filing return of income.
Aggrieved, assessee preferred appeal before CIT(A) however due to absence of the assessee it would become ex parte. Thereafter, the assessee filed a second appeal before the tribunal.
During the appeal proceedings, Ketan Ved, counsel for assessee submitted that while filing the return of income she neither had any intimation regarding the refund amount nor she had received any refund by cheque or ECS in a bank account.
P.D. Chougule, Counsel for Revenue submitted that the assessee has chosen to disclose the interest income not offered in the return of income only after the case was selected for scrutiny.
It was observed by the tribunal that during the scrutiny assessment proceedings, the assessee on the basis of Form 26AS, as available on the date, furnished a revised computation and offered the interest on income tax refund to tax.
Even though while filing her return of income, the assessee neither received any income tax refund by cheque or by ECS in a bank account nor there was any intimation regarding the determination of the refund amount.
After reviewing the contentions of the both parties the two member bench of Dr B.R.R. Kumar (Accountant Member) and C.M. Garg (Judicial Member) observed that the explanation of the assessee for not offering the interest on income tax refund while filing its return of income is bona fide.
Therefore, the bench held that non-declaration of interest on income tax refund cannot be said to be under reporting of income by the assessee within the meaning of Section 270A of the Income Tax Act.
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