Taxpayer penalized under section 270A(9) with 200% penalty for persistent misreporting and fraudulent refund claims from AY2016-17

ITAT PUNE - AT upheld AO's levy of penalty under sec. 270A(9) for misreporting/under-reporting of income, finding a persistent scheme of claiming fraudulent refunds by inflating deductions and reducing taxable income from A.Y. 2016-17 onwards. The assessee failed to provide any plausible legal basis or explanation for continuous misreporting, and the pattern was held to constitute fraud against the Department. NFAC's confirmation of a 200% penalty for misreporting was sustained and the appeal was dismissed.

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Issues Involved:
1. Confirmation of levy of penalty u/s 270A for under-reporting and misreporting of income for A.Y. 2017-18 and A.Y. 2018-19.

Summary:

Issue 1: Confirmation of levy of penalty u/s 270A for A.Y. 2017-18

The assessee filed an original return declaring an income of Rs. 4,22,340/- which was processed u/s 143(1) and a refund was issued. However, upon reopening the case u/s 148, it was revealed that the assessee had suppressed the gross total income by Rs. 3,20,000/- and overstated deductions under Chapter VI-A by Rs. 85,000/-. The assessee did not provide any explanation for these discrepancies during the appellate proceedings before NFAC. Consequently, the AO initiated penalty proceedings u/s 270A for under-reporting and misreporting of income, ultimately levying a 200% penalty for misreporting as defined u/s 270A(9). The NFAC upheld this penalty, noting the assessee's failure to disclose material facts and the habitual nature of fraudulent claims.

Issue 2: Confirmation of levy of penalty u/s 270A for A.Y. 2018-19

Similarly, for A.Y. 2018-19, the original return declared a gross total income of Rs. 7,46,015/- which was later found to be understated by Rs. 1,80,000/- in the return filed in response to notice u/s 148. Additionally, Chapter VI-A deductions were inflated by Rs. 1,55,000/-. The assessee failed to provide any explanation for these discrepancies. The NFAC determined this to be a case of misreporting of income as defined u/s 270A(9), justifying the 200% penalty levied by the AO.

Conclusion:

The Tribunal upheld the NFAC's decision to confirm the levy of penalty u/s 270A for both A.Y. 2017-18 and A.Y. 2018-19, dismissing the assessee's appeals. The Tribunal emphasized that the assessee's actions constituted misreporting of income, warranting the higher penalty as prescribed by law.

Order:

Both appeals of the assessee are dismissed.

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