TaxTMI 
TaxTMI 
2025 (11) TMI 1844
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....s of section 10(10D) of the Income-Tax Act, 1961. 3. Ld. A.O and Ld.CIT(A) - 10. Hyderabad failed to appreciate that the assessee disclosed full details of redemption of unit linked Insurance plan for a sum of Rs. 4,72,68,672/- and the premium paid of Rs. 75 lakhs in FY 2004 and 2006 in the return of income and appropriate TDS was made by the deductor. 4. Ld. A.O and Ld.CIT(A) failed to appreciate that the mere change of head of income from 'Capital Gains' to 'Income from other sources' does not amount to misreporting of Income U/s 270(9)(a) of the Income-Tax Act. 5. Ld. A.O and Ld.CIT(A) - 10, failed to appreciate that TDS of Rs. 1,39,79,547/- was made by the Bajaj Allianz at the time of redemption of unit linked Insurance plan and there was no suppression of facts as alleged by the Ld. A.O. 6. Ld. A.O erred in issue of a notice U/s 270A as there was no demand payable. as per the assessment order dated 21-11-2024 subsequently an order U/s 154 was passed raising the demand of Rs. 1,45,06,182/- vide order dated 30-11-2022. The Ld. A.O charge for imposing the penalty was not clear in the notice dated 21-11-2022. 7. Ld. A.O ....
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....the assessee is on account of the levy of penalty of Rs. 2,48,02,158/- under section 270A of the Act. The arguments of the Ld. AR were manifold. One of the objections raised by the Ld. AR is that there is no case of misreporting under section 270A (9) of the Act in the case of the assessee. In this regard, the Ld. AR invited out attention to the computation of income of the assessee placed at page no. 13 of the paper book and submitted that the assessee disclosed all facts fully and truly in his return of income. The only dispute in the present case is regarding the head of taxability of the income, whether it is taxable under the head of capital gain or under the head of income from other sources. The assessee under a bonafide belief had offered the income under the head of capital gain. However, the Ld.AO made it taxable under the head of income from other source. As such there is no misrepresentation or suppression of facts on the part of the assessee. Hence, the case of the assessee does not fall under any of the clauses (a) to (f) of section 270A (9) of the Act and the penalty levied by the Ld. AO is liable to be deleted. In support of his contention, the Ld. AR placed relianc....
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.... be deleted. In this regard, on perusal of the computation of income of the assessee, we find that the assessee has offered income of Rs. 3,22,68,672/- with regard to surrender of the Bajaj Equity Plus Fund in his return of income. Hence we are of the considered view that the assessee has disclosed all facts fully and truly in his return of income. Therefore, the only issue left for our consideration is that where the assessee has offered an income under the head of capital gain instead of under the head of income from other sources, whether the penalty of misreporting under section 270A(9) of the Act can be levied on the assessee or not. In this context, it is crucial to go through the provisions of section 270A(9) of the Act dealing with the penalty in the case of misreporting of income, which is to the following effect : Section 270A(9) in The Income Tax Act, 1961 (9) The cases of misreporting of income referred to in subsection (8) shall be the following, namely:- (a) misrepresentation or suppression of facts; (b) failure to record investments in the books of account; (c) claim of expenditure not substantiated by any evidence; (d) recording of any false entry ....
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....e assessee has suppressed or under reported any income. The addition came to be made to the total income returned by the assessee, due to change in the head of income, i.e., the addition has arisen on account of computational methodology prescribed in the Act. In our view, this kind of addition will not give rise to under reporting of income. Accordingly, we are of the view that the AO should have exercised his discretion not to initiate penalty proceedings u/s 270A of the Act in the facts and circumstances of the case. 11. As submitted by Ld A.R that sub. Sec. (2) of sec. 270A lists out the instances which are considered to be "under reporting" of income and clause (g) of it covers the case, when loss is converted into income. However, subsection (6) of section 270A lists out exceptions to sub. Sec (2), i.e., the instances which will not be considered as cases of 'under reporting' of income. Clause (a) of sub. Sec. (6) specifically states that the amount of income in respect of which the assessee offers an explanation and the Assessing Officer is satisfied that the explanation is bonafide and the assessee has disclosed all material facts to substantiate explanation so off....
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....ld not be treated as unexplained income not offered to tax in your hands." In response to the Summons u/s 131 Dt. 17.09.2022, The Assessee has requested for one week time for submitting reply to the summons and the same was accepted and granted one week time till 23.09.2022. However assessee has failed to furnish any response till 23.09.2022. Considering the non-response of assessce, show cause notice dt. 23-09-2022 was issued to assessce to submit the response to requisite information sought through summon dated 17.09.2022. 2 In response to show cause notice , vide submission dated 27.09.2022 assesse contended that he is unaware of any policy payouts by submitting as under "Policy pay-outs of Ra. 4,70,27,732/-As given in page No. 3 of your notice we have not received Rs. 4,70,27,732/- from anybody. Therefore there amounts cannot be added Investments are made prior to the financial year 2008-09 and were made through SCB, It is also evident that we have adficient funds in the banks as these amounts were brought into India from USA. The SCB Accounts are attached to this letter as sources for irwestments except for one investment of Rs.25,00,000/- in Bajaj Alliana plus ....