TaxTMI 
TaxTMI 
2023 (10) TMI 199
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....s Appeal Centre, Delhi ['Ld. CIT(A)'] has erred on facts and in law in confirming the penalty of Rs. 132,39,89,710/- under section 270A of the Act as levied by Ld. Assessing Officer ['Ld. AO'] for alleged under-reporting in consequence of misreporting of income. 2. That the alleged under-reporting in consequence of misreporting of income relates to incorrect amount of excess allowance under section 32AC of the Act claimed by the Appellant in its ITR based on bonafide inadvertent mistake in reporting of amount of deduction under section 32AC of the Act by the Tax Auditor in the Tax Audit Report. It is trite law that no penalties should be levied for inadvertent bonafide mistakes. Inter alia please refer Price Waterhouse Coopers Pvt Ltd. v CIT 348 ITR 306 (SC). As such, the penalty as levied and confirmed, deserves to be deleted in toto. 3. That on realizing the said inadvertent mistake by the Tax Auditor, the Appellant voluntarily rectified such mistake and included the said excess allowance under section 32AC of the Act during assessment proceedings before any query by Ld. AO. No penalty should be levied in case of voluntary inclusion prior to its ....
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....alia on CIT v SSA'S Emerald Meadows [2016] 73 taxmann.com 248 (SC); Prem Brothers Infrastructure LLP v. NFSC 142 taxmann.com 38 [2022] (Delhi HC); Schneider Electric South East Asia (HQ) PTE Ltd. v. Asst. CIT, International Taxation [TS-226- HC-2022(DEL)]. 9. That penalty at 200% has erroneously been levied and confirmed under section 270A of the Act for misreporting of income. The Appellant's case does not fall in any of the cases of misreporting of income referred to in section 270A (9) of the Act. It has been wrongly alleged that the Appellant's case falls under clause (a) of Section 270A(9) of the Act i.e. "misrepresentation or suppression of facts". Clearly on facts and law involved, there is no "misrepresentation or suppression of facts" in this case. 10. That there is just and reasonable cause for the default, if any, and as such too, no penalty is leviable in this case. 11. That the penalty as levied and confirmed is based on erroneous views and / or non-appreciation of the facts or law involved and without properly considering and rebutting the material, submissions and binding case laws in favour of appellant relied upon. Moreover, t....
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....ccount, bank statements, Form 26AS, reconciliation of income as shown in ITR and profit and loss account and various other documents that were called for by the AO from time to time. 6. In the tax audit report in response to question No. 19, the tax auditor had reflected the figure of claim of deduction u/s 32AC of the Act of Rs. 225,03,97,246/- . Notice u/s 143(2) of the Act was issued to the assessee on 05.09.2018 and 27.09.2018. Notices u/s 142(1) of the Act were issued to the assessee on 02.01.2019 and 28.01.2019 on which dates, no query regarding the claim of deduction u/s 32AC of the Act was sought for by the ld AO. The 3rd notice issued u/s 142(1) of the Act dated 06.02.2019 was issued wherein, the ld AO sought for furnishing of complete tax audit report along with annexures. The assessee vide letter dated 02.04.2019 addressed to the ld AO submitted that deduction u/s 32AC of the Act had been erroneously claimed by the assessee @100% of the value of investment in new plant and machinery instead of eligible rate of 15% of the value thereon which worked out to Rs. 33,79,59,878/-. Accordingly, the assessee requested the AO to consider the claim of deduction u/s 32AC of the A....
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....e) failure to record any receipt in books of account having a bearing on total income; and (f) failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply." 10. It was pointed out that the assessee's case does not fall under any of the clauses mentioned in section 270A(9) of the Act and hence no penalty could be levied on the assessee for misreporting of income. It was pointed out that case underreporting of income are covered in section 270A(2) of the Act as under:- "(2) A person shall be considered to have under-reported his income, if- (a) the income assessed is greater than the income determined in the return processed under clause (a) of sub-section (1) of section 143; (b) the income assessed is greater than the maximum amount not chargeable to tax, where no return of income has been furnished; (c) the income reassessed is greater than the income assessed or reassessed immediately before such reassessment; (d) the amount of deemed total income assessed or reassessed as per the provisions of s....
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.... the assessee had maintained information and documents as prescribed under section 92D, declared the international transaction under Chapter X, and, disclosed all the material facts relating to the transaction; and (e) the amount of undisclosed income referred to in section 271AAB." 12. It was also pointed that as per section 270A(7) of the Act, the penalty under sub-section (1) of Section 270A shall be a sum equal to 50% of amount of tax payable of underreported income. Hence, for underreporting of income, penalty leviable would be 50% of tax of underreported income as per section 270A(7) of the Act and in case of underreported income in consequence of misreporting of income, penalty leviable shall be 200% of tax payable of underreported income as per section 270A(8) of the Act. It was submitted that assessee's explanation was bona fide and there was a genuine error committed in the tax audit report which stood rectified by the assessee on its own volition before it could be detected by the AO during the course of assessment proceedings. Accordingly, it was prayed that penalty shall not be leviable in the facts of the instant case. The ld AO however, did not heed to th....
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....of the Act was raised by the ld AO only vide notice u/s 142(1) of the Act on 13.09.2019, before which date, the assessee had already withdrawn the excess claim of deduction u/s 32AC of the Act by way of written letter dated 02.04.2019. The assessee again in response to notice u/s 142(1) of the Act dated 13.09.2019 had filed a reply letter dated 18.09.2019 before the ld AO wherein, it categorically stated that claim of deduction u/s 32Ac of the Act would be only Rs. 33,75,59,587/- and enclosed a certificate from the tax auditor to that effect and further filed revised computation of total income wherein, the withdrawal of excess claim of deduction was duly reflected. It is absolutely not in dispute in the instant case that assessee is indeed entitled for deduction u/s 32AC of the Act in view of the investment made in new plant and machinery. In fact the ld AO on being satisfied about the eligibility of the assessee to claim deduction u/s 32AC of the Act had indeed granted deduction @15% of value of new plant and machinery. Hence, the preliminary objection raised by the ld DR in this regard that assessee is not eligible to claim deduction u/s 32AC of the Act, does not have any legs t....