Appellate Tribunal reduces penalties for underreported income and non-submission of tax audit report.

In ITA No. 30/Viz/2023 (AY: 2017-18), the Appellate Tribunal reduced the penalty imposed under section 270A on the assessee-firm for underreported income to 50% of the tax payable, as the purchases and sales returns were found to be properly accounted for. The Tribunal also ruled that penalties based on expenditure estimation are not sustainable, leading to the deletion of the penalty imposed by the Assessing Officer. In ITA No. 31/Viz/2023 (AY: 2017-18), the Appellate Tribunal overturned the penalty under section 271B imposed for non-submission of the tax audit report, as the report was prepared for the correct year but uploaded incorrectly. The penalties were deemed unjustified and were deleted in both cases.

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Issues involved:
The judgment involves issues related to penalty orders passed under sections 270A and 271B of the Income Tax Act, 1961.

ITA No. 30/Viz/2023 (AY: 2017-18):
The case involved the assessee-firm's failure to include purchases and sales returns while filing VAT returns, resulting in underreported income. The Assessing Officer (AO) levied a penalty under section 270A. The Appellate Tribunal found that the purchases and sales returns were duly accounted for in the books of accounts, and the penalty was reduced to 50% of the tax payable on the underreported income. Additionally, the Tribunal held that penalty for disallowance of expenditure based on estimation cannot be levied. Therefore, the penalty levied by the AO was deemed unsustainable and was directed to be deleted.

ITA No. 31/Viz/2023 (AY: 2017-18):
This appeal dealt with the non-submission of the tax audit report under section 44AB for the relevant assessment year. The AO initiated penalty proceedings under section 271B, which was upheld by the CIT(A). However, the Appellate Tribunal observed that the audit report was prepared for the correct assessment year but was mistakenly uploaded for the previous year. As the assessee had complied with the audit requirements, the penalty under section 271B was deemed unjustified and was directed to be deleted. Consequently, the appeal of the assessee was allowed.

Separate Judgment by Judges:
The judgment was delivered by Shri S Balakrishnan, Hon'ble Accountant Member, and Shri Duvvuru Rl Reddy, Hon'ble Judicial Member.

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