TaxTMI 
TaxTMI 
2026 (7) TMI 878
X X X X Extracts X X X X
X X X X Extracts X X X X
....Ld. CIT(A) erred in confirming the penalty of Rs. 17,41,867 under section 270A of the Act, being 50 percent of the tax payable on under reported income. 2. The appellant craves leave to add further grounds or to amend or alter the existing grounds of appeal on or before the date of hearing. Facts in Brief 3. The assessee, a private limited company, filed its original return of income for A.Y. 2017-18 on 28.11.2017 declaring loss of Rs. 1,59,430/- and thereafter revised the return on 07.04.2018 declaring loss of Rs. 1,06,36,724/-. The assessment was completed by the Assessing Officer under section 143(3) of the Act vide order dated 25.12.2019. The case was selected for scrutiny under CASS and notices under sections 143(2) and 142(1) were issued, in response to which the assessee filed submissions. 4. During assessment proceedings, the Assessing Officer noticed that the assessee was a partner holding 50% share in M/s Monji Vishram & Co. and had shown capital investment of Rs. 1,10,74,052/- in the said firm. Since the assessee was earning exempt share of profit from the firm, the Assessing Officer invoked section 14A read with Rule 8D and made disallowance of Rs. 59,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....peal, the learned CIT(A), vide order dated 12.11.2025 passed under section 250 of the Act, accepted that the assessee had admitted the error during assessment proceedings and had also stated that the excess loss claimed in the revised return was not adjusted in any subsequent year. However, the learned CIT(A) held that the case fell within section 270A(2)(g), since the assessment had the effect of reducing the loss claimed by the assessee. The learned CIT(A), therefore, sustained the levy of penalty under section 270A, but restricted it to 50% of the tax payable on under-reported income. Accordingly, the penalty was reduced from Rs. 69,67,468/- to Rs. 17,41,867/-. 10. The learned Authorised Representative (AR) reiterated the facts and submitted that all primary facts were disclosed in the return itself and there was no suppression or non-disclosure of any material particulars. The AR invited ur attention to the copy of income tax return placed in the paper book. 11. The learned AR submitted that the error occurred only while preparing and electronically filing the return of income, particularly while filling Schedule BP. The exempt share of profit was mistakenly reduced once ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....63 (Mumbai-Trib.), wherein the assessee had erroneously not reduced insurance claim from block of assets while computing depreciation, resulting in excess claim of depreciation. The Tribunal upheld deletion of penalty under section 270A on the ground that the excess claim was a bona fide mistake. 17. The learned AR submitted that the ratio of the above decisions clearly supports the assessee's case. The addition in the present case did not arise on account of any undisclosed income, false entry, bogus claim or suppression of facts. It arose only because an exempt income, already disclosed in Schedule EI, was inadvertently deducted again in Schedule BP. It was accordingly submitted that the penalty sustained by the learned CIT(A) may be deleted. 18. The learned Departmental Representative (DR) supported the orders of the lower authorities. It was submitted that this is not a case where the error occurred only in the original return. The assessee had filed a revised return also and the same error was repeated in the revised return. According to the learned DR, once the assessee had an opportunity to revisit the return and revise the same, repetition of the error in the revised ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ome or furnished inaccurate particulars. The nature of the error, the disclosure of the exempt income in Schedule EI, the reflection of the said amount in the balance sheet, the immediate acceptance of recomputation during assessment proceedings and the affidavit of the Chartered Accountant are relevant circumstances which cannot be ignored. 23. Section 270A is not intended to visit every adjustment or every reduction of loss with penalty. Section 270A(2)(g) may describe a situation where assessment has the effect of reducing the loss or converting such loss into income. However, even in a case of under-reporting, sub-section (6) carves out exceptions, inter alia, where the assessee offers an explanation and the authority is satisfied that the explanation is bona fide and all material facts have been disclosed to substantiate the explanation. In the present case, the primary facts relating to the share of profit were disclosed in the return itself. The source of exempt income, the amount of exempt income and the treatment thereof in Schedule EI were available on record. The error is in the manner of filling Schedule BP and not in suppressing the income. 24. We also find that ....