TaxTMI 
TaxTMI 
2026 (6) TMI 1137
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.... income (RoI) for AY 2022-23 on 30.07.2022, declaring total income of Rs. 1,21,73,440/-, which includes capital gains from security transactions. The case was selected for scrutiny and the assessment has been completed u/s. 143(3) r.w.s.144B of the Income Tax Act, 1961 (in short "the Act") on 22.03.2024 by making addition towards Shrot Term Capital Gains (STCG) and Long-Term Capital Gains (LTCG) derived from 'redemption of Mutual Funds'. Accordingly, penalty proceedings u/s. 270A of the Act for 'underreporting of income' has been initiated. During the course of penalty proceedings, a show cause notice (SCN) dated 07.06.2024 & 06.08.2024 was issued requesting the assessee to explain 'as to why' order imposing penalty u/s. 270A of the Act sha....
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....er. During the appellate proceedings, the Ld.CIT(A) has provided '8' opportunities to the assessee but no response from the assessee. The assessee neither appeared nor submitted any explanation. Therefore, the Ld.CIT(A) on the basis of material available on record, upheld the penalty levied by the AO u/s. 270A of the Act by holding that the facts would clearly indicating the suppression of certain facts in respect of 'redemption of Mutual Funds' which is evident from the reasons given by the AO, where assessee has failed to record any receipt in books of accounts having a bearing of total income by which the provisions of Sec.270A(9)(a) & 270A(9)(e) of the Act are squarely attracted. 4. Aggrieved by the order of the Ld.CIT(A), the assess....
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....6 (SC). 6. The Ld.SR-AR for Revenue, on the other hand, supporting the order and submitted that it is a clear case 'underreporting of income is in consequence of misreporting of income thereof' which is evident from the additions made by the AO towards STCG/LTCG towards 'redemption of Mutual Funds'. 'Redemption of Mutual Funds itself in the knowledge of the assessee as redemption comes to the bank account of the assessee. The assessee while filing RoI ought to have considered relevant bank entries. Further, the assessee admitted 'underreporting of income' and also paid taxes. The AO after considering relevant facts has rightly levied penalty for 'underreporting of income is in consequence of misreporting of income thereof' and thus, the ....
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.... the fact that there is a difference between RoI and assessed income in respect of additions made by the AO towards STCG/LTCG. The above 'underreporting of income is in consequence of misreporting of income thereof' which is evident from the relevant reasons given by the AO, where the AO brought out clear reason to the effect that the assessee has failed to record proceeds received from 'redemption of Mutual Funds' in the RoI. Therefore, in our considered view, failure to record 'redemption of Mutual Funds' and consequence reporting of capital gains is a clear case of misreporting of income referred to in section 270A(9)(e) the Act i.e. failure to record any receipts in books of accounts having bearing on total income. Therefore, we are of ....