No Penalty shall be levied u/s 270A of Income Tax Act on  Inadvertently  Reported Annual Value of  House Property by Accountant: ITAT [Read Order]

The Chennai bench of Income Tax Appellate Tribunal (ITAT) has recently held that no penalty should be levied  under Section 270A of Income Tax Act 1961 on inadvertently reported annual value of house property by an accountant.

The assessee S. Saroja filed her return of income on 31.03.2018, the said return has been revised  and declared total income of Rs. 51,78,140/-. The case was selected for scrutiny and during the course of assessment proceedings, the AO noticed that the assessee has adopted annual value of house property at Rs. 5,40,000/- instead of Rs. 8,40,000/- in the revised return filed for the relevant assessment year.

The AO called upon the assessee to explain regarding the revised return. The assessee submitted that the Accountant who filed the return has adopted an incorrect figure while computing annual value of house property and thus, requested the AO to consider the difference amount as income of the assessee under the head income from house property.

After considering the relevant submissions of the assessee, the AO completed the assessment under Section 143(3) of the Income Tax Act  and made additions towards annual value of house property and interest income under the head income from other sources .

Thereafter, the AO initiated penalty proceedings under Section 270 of the Income Tax Act for under-reporting of income  by misreporting of its income.

Aggrieved by the order, theassesee filed an appeal before the Commissioner of Income Tax (Appeals), who dismissed the appeal of the assessee ,Thus the assessee filed a second appeal before the tribunal.

B. Sakthivel, the counsel for the assessee submitted that  the accountant who filed return of income by inadvertent error disclosed annual value of the house property at Rs. 5,40,000/- instead of Rs. 8,40,000/-.

Further in respect of interest income, the assessee on bonafide belief declared interest income under the head income from business. However, AO noticed the above mistakes, and  fairly agreed and paid taxes on annual value of the house property and also accepted assessment of interest income under the head of other sources.

Therefore, it cannot be said that the assessee has under-reported his income by misreporting income which warrants a penalty under Section  270A of the Income Tax Act.

D. Hema Bhupal, counsel for the revenue submitted that as per the provisions of section 270A of the Income Tax Act, if assessed income is more than the amount of returned income, then penalty is leviable under Section  270A of the Income Tax Act . Assessee  has misreported his income, the AO had  rightly levied a penalty.

It was observed by the tribunal that mistakes on part of the asse’saccountant cannot be considered as under reporting of income for levying of penalty under Section 270A of the Income Tax Act.

When the assessee has explained that there is a bonafide mistake in offering interest income under the head income from business and also there is no difference in tax when it was offered under the head income from other source and income from business.

Hence, there was no reason for the AO to levy penalty Section 270 A of Income Tax Act, for under reporting of income.

Therefore, the two  member benches of Mahavir Singh, (Vice President)  and Manjunatha. G, (Accountant Member ) deleted thepenalty levied under Section 270A of Income Tax Act towards under reporting of income in respect of annual value of house property.

To Read the full text of the Order CLICK HERE

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