Penalty under Section 270A(9)(e) vacated as additions stemmed from disallowed deductions, not unrecorded receipts, favoring assessee

ITAT PUNE - AT held that penalty under section 270A(9)(e) was erroneously levied where there was no failure to record any receipt in the assessee's books; the addition arose from disallowance of deductions under Section 24 and Chapter VI-A, not from unrecorded receipts. Consequently the penalty under the incorrect provision was not maintainable and the AO was directed to delete the penalty, decision in favor of the assessee.

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Issues involved:
The appeal challenges the penalty u/s 270A of Rs. 2,60,874 levied by the AO without specifying the exact limb of section 270A(9) allegedly violated by the assessee, and disputes the underreporting of income attributing it to the tax consultant's actions.

Issue 1 - Penalty under incorrect section:
The AO levied penalty under section 270A(9)(e) for failure to record any receipt in books of accounts, but the disallowance was actually for deductions claimed under Chapter-VIA and Section 24 of the Act, not for any failure to record receipts. The penalty under section 270A(9)(e) was deemed incorrect and not maintainable, leading to the direction to delete the penalty of Rs. 2,60,874.

Issue 2 - Similarity in another assessment:
In a separate case for A.Y. 2018-19, a penalty of Rs. 4,10,974 was imposed under section 270A(9)(e) for disallowance of Chapter-VIA deduction and deduction under section 24 of the Act. Given the similarity in facts with the previous case, the decision in the first appeal was applied mutatis mutandis, resulting in the allowance of the appeal.

Conclusion:
Both appeals challenging penalties under section 270A were allowed, with the direction to delete the penalties imposed. The order was pronounced on 26th March, 2024.

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