Tax Penalty Overturned: Insufficient Evidence Leads to Reversal of 200% Penalty Under Section 270A for Undisclosed Interest Income

ITAT Pune reviewed Revenue's appeal on tax penalty for non-disclosure of interest income. The Tribunal, led by Judicial Member, found no justification for the 200% penalty under Section 270A. Citing precedents, the Tribunal noted lower authorities' failure to specify the exact clause violated. Consequently, the appeal was allowed, with the penalty deemed unsustainable due to procedural inadequacies.

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The Appellate Tribunal ITAT Pune reviewed the Revenue's appeal concerning the assessment year 2017-2018, which challenged the National Faceless Appeal Centre's decision regarding proceedings under Section 270 of the Income Tax Act, 1961. The case involved a 200% penalty imposed on the assessee for not disclosing interest income of Rs.21,84,353, which was considered "under-reporting" due to "misreporting" under Section 270A(8) and (9) of the Act. The Revenue, represented by Shri Ramnath P. Murkunde, argued the penalty was justified due to the non-disclosure.However, the Tribunal, led by Judicial Member Satbeer Singh Godara, found no justification for the penalty. The Tribunal noted that the lower authorities failed to specify which clause under sub-section (9), read with sub-section (8) of Section 270A, was violated by the assessee. This omission was significant, as highlighted by the jurisdictional high court's decision in Mohd. Farhan A. Shaikh Vs. ACIT [2021] 434 ITR 1 (Bom), which invalidated penal proceedings due to such failures. The Tribunal also referenced Schneider Electric South East Asia (HQ) Ltd. vs. ACIT [2022] 443 ITR 186 (Delhi), affirming this principle under the new scheme of Section 270A applicable from 01.04.2017. Consequently, the Tribunal allowed the assessee's appeal, concluding that the penalty was unsustainable due to the lack of specification by the lower authorities. The order was pronounced in open court on 24.04.2024.

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