2023 (4) TMI 846 - AT - Income Tax

Tribunal deletes penalty for under-reporting income under Income Tax Act, 1961

M/s. Pallava Textiles Private Limited Versus The Income Tax Officer, National Faceless Assessment Centre [NaFAC], Delhi

M/s. Pallava Textiles Private Limited Versus The Income Tax Officer, National Faceless Assessment Centre [NaFAC], Delhi - TMI Issues involved: The appeal challenges the penalty u/s 270A of the Income Tax Act, 1961 imposed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for the assessment year 2017-2018.Delay in filing appeal: The appeal was delayed by 52 days due to technical glitches in downloading the order u/s. 250, and further delayed by 4 days due to a courier service issue. The assessee filed a petition for condonation of delay, which was accepted as the delay was not intentional and the assessee was prevented by reasonable cause.Assessment and penalty proceedings: The assessee company's return for the assessment year 2017-18 was processed under section 143(1) and later scrutinized under CASS. The Assessing Officer disallowed an amount from repair and maintenance expenses, leading to penalty proceedings u/s 270A. The penalty of Rs. 5,70,222 was imposed for under-reporting income related to disallowed expenses. The ld. CIT(A) upheld the penalty.Arguments and decision: The assessee argued that the disallowed amount was on an estimated basis and did not constitute under-reporting. The Tribunal agreed, stating that disallowing 20% of the expenditure claimed does not amount to under-reporting income. As all details were provided to the Assessing Officer, and the disallowance was estimated, the penalty u/s 270A was deemed unsustainable. Consequently, the penalty was deleted, and the appeal by the assessee was allowed.Conclusion: The Tribunal ruled in favor of the assessee, deleting the penalty imposed u/s 270A of the Income Tax Act, 1961. The order was pronounced on 10th March 2023 in Chennai.