TaxTMI 
TaxTMI 
2026 (3) TMI 1333
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..../- u/s 43B of the Act. 4. Subsequently, Penalty proceedings u/s 270A of the Act was initiated and show cause notice u/s 274 read with section 270A was issued and called upon the assessee to explain as to why penalty shall not be levied for under reporting of income, which is in consequence of misreporting thereof u/s 270A(9) of the Act. During the course of penalty proceedings, the AO noticed that the tax auditor has certified in the audit report in Form 3CD that labour cess amounts to Rs. 40,76,414/- has not been paid on or before the due date provided for filing return of income u/s 139(1) of the Act, which attracts the provisions section 43B, however, the said amount was not included in the disallowances made by the assessee in the computation of total income. Thus, labour cess of Rs. 40,76,414/- was disallowed and added back to the total income u/s 43B. Accordingly, a show cause notice, dated 06.09.2021 and 08.03.2022 was issued to the assessee to file its objection, if any for proposed penalty u/s 270A of the Act. In response, the assessee filed letter dated 28.05.2021 and submitted that by inadvertent error, the assessee failed to add disallowance reported by the tax audit....
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....hallenged penalty levied by the AO, in light of bonafide explanation and submitted that it is only an error in reporting the income, i.e., because of inadvertent mistake committed, while filing the return of income and thus, the AO ought not levied penalty u/s 270A(9) of the Act. 7. The Ld.CIT(A), after considering the relevant submissions of the assessee and also taking note of various reasons given by the AO for levying penalty u/s 270A of the Act, rejected the explanation of the assessee with regard to notice issued by the AO u/s 274 r.w.s.270A of the Act and held that, in the assessment order, the AO had arrived at a clear satisfaction to the effect that the assessee has under reported income, is in consequence of misreporting and further initiated penalty proceedings u/s 270A(9) of the Act. The Ld.CIT(A) had also rejected the arguments of the assessee on the issue of levy of penalty and held that even in case of reduction in loss returned by the assessee, in consequence to additions/disallowances attracts provisions of section 270A of the Act. Therefore, once the assessee has under reported its income, which is in consequence of misreporting, the provisions of section 270A(....
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....ce of misreporting thereof, because, the assessee's case clearly falls under sub section (6) of section 270A, where, it has been clearly stated that under reporting of income for the purpose of this section shall not include the amount of income, in respect of which, assessee offers explanation and the AO or Commissioner, as the case may be is satisfied that the explanation is bonafide and the assessee has disclosed all the material facts to substantiate the explanation offered. In the present case, the assessee has furnished all facts related under reported income considered by the AO towards additions made on account of labour cess u/s 43B of the Act, by filing relevant tax audit report and also explained that said mistake is only inadvertent mistake, while filing the return of income and not with an intention to under report the income. Further, the appellant has furnished all the particulars with reference to said addition and therefore, the explanation offered by the assessee is bonafide and gets covered under sub section (6) of section 270A of the Act and thus, the AO ought not to have levied penalty u/s 270 of the Act. The Ld.CIT(A), without appreciating the relevant facts, ....
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....tal US Holdings inc.Vs. DCIT (supra). There is no dispute with regard to fact that in the assessment proceedings, the AO initiated penalty proceedings u/s 270A(9) of the Act, for under reporting of income, is in consequence of misreporting thereof. The AO had also issued a show cause notice u/s 274 r.w.s. 270A of the Act, on very same charge i.e. for under reporting of income, is in consequence of any misreporting thereof. From the show cause notice issued by the AO, coupled with observations in the assessment order, it is very clear that the AO has arrived at a clear satisfaction, in so far as the levy of penalty u/s 270A(9) of the Act for under reporting of income, is in consequence of misreporting thereof. Therefore, in our considered view, non specifying the sub clause under which, sub section (9) of section 270A is applicable is only imaginary and stretching beyond the scope of section 270A(9) of the Act and thus, the arguments of the counsel for the assessee cannot be accepted. In so far as the decision of Hon'ble Delhi High Court in the case of GE Capital US Holdings inc.Vs. DCIT (supra), we find that in the above case, in particular para 23 and 24, the Hon'ble High Court ha....
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....and after expiry of the period of filing the appeal as per section 249(2), grant immunity from imposition of penalty u/s 270AA, where, the proceedings for penalty u/s 270A has not been initiated under the circumstances referred to in sub section (9) of section 270A of the Act. In other words, the assessee can file application for immunity from imposition of penalty u/s 270A, only in a case, where, penalty has been initiated for under reporting of income u/s 270A(2) of the Act and in case, penalty proceedings have been initiated u/s 270A(9) of the Act, then the question of filing application by an assessee does not arise and consequently, the AO need not pass an order under sub section (4) of section 270AA of the Act. In the present case, since the AO has initiated penalty u/s 270A(9) of the Act, in our considered view, the application filed by the assessee u/s 270AA on 28.05.2021 becomes infructuous or not maintainable and thus, the AO need not pass an order as per section 270AA(4) of the Act. Therefore, we reject the arguments of the counsel for the assessee on this ground also. 15. Coming back to the penalty levied by the AO u/s 270A(9) of the Act. Admittedly, the AO levied pe....