Penalty Imposed u/s 270A of IT Act for Misreporting of Income without Application of Mind: ITAT directs Re-adjudication [Read Order]

The Mumbai bench of Income Tax Appellate Tribunal (ITAT) held that the penalty imposed by the assessing officer under section 270A of Income Tax Act,1961 for misreporting of income without the application of mind is invalid.

Saltwater Studio LLP, the appellant assessee appealed against the order passed by the Commissioner of Income Tax ( Appeals) for confirming the penalty levied by assessing under section 270A of the Income Tax Act.

Dhaval Shah, the counsel for the assessee contended that the bare reading of the section 270A of Income Tax Act reveals that the assessing officer ‘may’ direct the assessee to pay penalty in addition to tax on the under-reported income. It was also submitted that this conveyed the intention of the Parliament for levy of penalty under section 270A of the Income Tax Act was not mandatory.

Anil K. Das, the counsel for the revenue strongly supported the decisions made by the lower authorities and contended that the orders was passed according to the provision of law under section 270A of Income Tax Act.

The two member bench comprising of Aby T. Varkey (Judicial) and Om Prakash Kant ( Accountant) held that the assessing officer failed to bring the addition/disallowance he made in quantum assessment, under the ken of (a) to (f) of the sub-section(9) of section 270A of the Income Tax Act and the penalty levied for misreporting @ 200% cannot be sustained ,because it is trite law that penalty

provisions have to be strictly interpreted.

It was also directed the assessing officer for re-adjudication that the imposition of penalty by the assessing officer under section 270A of the Income Tax Act suffers from the vice of non-application of mind as well as violated the principles of natural justice and are liable to be deleted while allowing the appeal filed by the assessee.

To Read the full text of the Order CLICK HERE

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