TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 658
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....r invalid due to failure in specifying applicable limb under section 270A(9) of the Act in all notices and orders throughout the penalty proceedings In the facts and circumstance of the present case and in law, the penalty order passed under section 270A of the Act, levying penalty of Rs. 26,15,568, at the rate of 200%, concluding it as case of underreporting in consequence of misreporting is vague, arbitrary and invalid considering the failure to specify in any of the notices as well as in the penalty order as to which limb of section 270A(9) of the Act is allegedly attracted in the present case: 2. Ground No. 2 - Levy of penalty under section 270A of the Act amounting to Rs.26,15,568 is bad in law The Hon'ble CIT(A) has erred in confirming the order of the learned Assessing Officer ('learned AO') of levy of penalty under section 270A of the Act amounting to 26,15,568 without appreciating that it is not a case of under-reporting of income as well as not a case of underreporting in consequence of misreporting of income, In doing so, the Hon'ble CIT(A) erred in 2.1. Not considering the facts of the present case and submiss....
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....ed and shown as business income and set off against business expense has been revised in the computation of income and declared as income under the head 'short term capital gain'. It was stated by the assessee that revised computation has been filed after considering the decision of the Coordinate Bench, Ahmedabad in the case of Ashok Kumar Khimraj (HUF) Vs. ITO in ITA No.674/Ahd/2017 dated 07.12.2018. Ld. AO concluded the assessment proceedings making the addition for short term capital gain at Rs. 43,78,250/-. Subsequently, ld. AO initiated the penalty proceedings by issuance of notice u/s. 274 r.w.s. u/s. 270A of the Act on 16.07.2021 for under reporting of income in consequence of misreporting of income. However, as per the ld.AO assessee failed to comply to the notice of hearing and ld. AO concluding the proceedings levying penalty u/s. 270A of the Act @200% of the tax of Rs. 13,07,784/- thereby calculating the penalty at Rs. 26,15,568/-. 4. Aggrieved assessee preferred appeal before ld.CIT(A), who affirmed the order of the AO observing that the assessee has failed to comply to the show cause notice issued by him. Now the assessee is in appeal before this Tribunal. 5. Ld....
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....ompliance to the notice issued by the authorities and the same is depicted in the following chart : Compliance Chart I. Notices issued during the course of the Penalty Proceedings and the relevant submissions filed before the Assessing Officer Sr. No. Date of issuing Notice Page no. of Factual Paper book Date of Compliance Page no. of Factual Paper book 1 12/12/2019 99-102 22/01/2020 103-116 2 05/11/2020 117-117 20/11/2020 118-119 3 08/05/2021 120-121 18/05/2021 122-135 4 07/06/2021 136-137 30/09/2021 138-140 5 16/07/2021 141-143 30/09/2021 144-146 II. Notices issued during the course of the Appellate Proceedings and the relevant submission filed before the Learned Commissioner of Income-tax (Appeals) Sr. No. Date of issuing Notice Page no. of Factual Paper book Date of Compliance Page no. of Factual Paper book 1 09/03/2022 147-150 24/03/2022 151-167 2 16/11/2022 168-168 01/12/2022 169-172 3 08/08/2024 173-176 14/08/2024 177-194 8.1 Going through the above details, I find that the assessee has made all the nece....
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....missions and perused the material available on record. The assessee is engaged in the business of manufacturing and sale of cement, manufacturing and sale of asbestos sheets, heavy engineering workshop and foundry. The assessee filed its return of income electronically for AY 2017-18 on 31.10.2017 declaring loss of Rs. 641,08,95,408/-. The assessment was completed u/s 143(3) on 01.10.2019 declaring loss of Rs. 4,49,80,57,749/-. In the return, the assessee claimed deduction u/s 32AC of the Act in the sum of Rs. 225,03,97,246/- which is the gross amount of investment in new plant or machinery as against its claim of 100% deduction u/s 32AC of the Act. The ld AO granted deduction u/s 32AC of the Act only to the extent of 15% of gross amount of investment in new plant and machinery which worked out to Rs. 33,75,59,587/-. For the differential disallowance of deduction u/s 32AC of the Act, the ld AO initiated penalty proceedings u/s 270A of the Act on the ground that the assessee had underreported or misreported its income to the extent of Rs. 191,28,37,659/- (Rs. 2,25,03,97,246 - Rs. 33,75,59,587). 5. The return of income filed by the assessee was duly accompanied by tax audit ....
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....tifying the correct figure of claim of deduction u/s 32AC of the Act. The assessment u/s 143(3) of the Act dated 01.10.2019 was ultimately completed at the same income at the same loss figure of Rs. 449,80,57,749/- as was disclosed by the assessee in the revised computation of total income filed on 18.09.2019. 8. In response to the penalty proceedings initiated u/s 270A of the Act dated 01.10.2019, the assessee submitted a reply vide letter dated 06.12.2019 narrating the entire facts of the case and also bringing to the notice of the ld AO that the excess claim of deduction u/s 32AC of the Act was suo moto withdrawn by the assessee due to inadvertent mistake committed by the Tax Auditor in the tax audit report, before it could be detected by the ld AO. Further, it was also brought to the notice by the AO that as per section 270A of the Act, penalty was proposed to be levied for following two defaults:- a) Misreporting of income b) Underreporting of income. 9. It was pointed out that the cases of misreporting of income are covered u/s 270A(9) of the Act as under: "(9) The cases of misreporting of income referred to in sub-section (8) shal....
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....ing the loss retuned by the assessee. It was further pointed out that under reporting of income has got certain exceptions as provided in section 270A(6) of the Act as under:- (6) The under-reported income, for the purposes of this section, shall not include the following, namely:- (a) the amount of income in respect of which the assessee offers an explanation and the Assessing Officer or the Commissioner (Appeals) or the Commissioner or the Principal Commissioner, as the case may be, is satisfied that the explanation is bona fide and the assessee has disclosed all the material facts to substantiate the explanation offered; (b) the amount of under-reported income determined on the basis of an estimate, if the accounts are correct and complete to the satisfaction of the Assessing Officer or the Commissioner (Appeals) or the Commissioner or the Principal Commissioner, as the case may be, but the method employed is such that the income cannot properly be deduced therefrom; (c) the amount of under-reported income determined on the basis of an estimate, if the assessee has, on his own, estimated a lower amount of addition or disallowance on the same i....
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....he Act ; and (d) whether the assessee has underreported his income in consequence of misreporting of income thereon so as to be invited with higher rate of penalty in terms of section 270A(8) of the Act. In the instant case from the facts narrated and sequence of events narrated hereinabove, it is very clear that the assessee had indeed claimed deduction u/s 32AC of the Act @100% value of investment in new plant and machinery in the return of income based on the figure mentioned thereon in tax audit report by the Tax Auditor. However, on noticing the mistake that had happened in the return and in view of the fact that the time limit for filing revised return has expired, the assessee voluntarily withdrew the excess claim of deduction u/s 32AC of the Act vide its letter dated 02.04.2019 wherein, clearly stating that the correct claim of deduction u/s 32AC of the Act would @15% of plant and machinery which worked out to Rs. 33,75,59,587/-. Further, the assessee also enclosed a certificate from the Tax Auditor dated 06.03.2019 wherein, Tax Auditor had duly admitted inadvertent mistake that had been committed in the tax audit report and also certified the correct figu....
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....e find that the ld AR also made argument on the ground that there was absolutely no mala fide intention on the part of the assessee to claim excess deduction u/s 32AC of the Act in the facts of the instant case as even after the withdrawal of the differential 85% claim of deduction in the sum of Rs. 191 crores, the assessee still has brought forward losses to the tune of Rs. 2698.95 crores as is evident from the schedule CFL (details of loss to be carry forward) in the ITR filed for AY 2017-18. We are in agreement with this argument of the ld AR which proves the intention and behaviour of the assessee to withdraw the claim of deduction voluntarily by the assessee. 15. Further, the ld. AR argued that, in any case, a mistake of a professional cannot invite an assessee with the levy of penalty and for which, he relied on the decision of the Hon'ble Punjab and Haryana High Court in the case of CIT Vs. Deep Tools Pvt. Ltd as reported in 274 ITR 603. Further, the ld AR also argued that in the penalty show cause notice issued u/s 270A read with Section 274 of the Act, the ld AO did not mention the specific charge of offence committed by the assessee i.e. the AO did not mentio....