TaxTMI 
TaxTMI 
2026 (8) TMI 268
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....o the extent of 50% of Tax u/s. 270A(7) on Total Income reported in the return of Income Filed despite the fact that there is no additions made in the course of Assessment and the Taxes were already been paid before the completion of Assessment. iii. Upholding the Levy of penalty to the extent of 50% of the Gross Tax Payable without considering the Tax Deducted at Source which is information available with the Department and is reflecting in form 26AS. iv. Erred in Confirming the Order of Penalty on the Ground that no appeal has been preferred against the Order for Assessment without appreciating the fact that there are no Additions made in the Assessment and there no Taxes are payable. v. Erred in ignoring the fact that there is no under reporting of Income as the only source of Income is from Salaries which is appearing in AIS and full Tax is deducted at Source and withdrawal of Provident fund where the payments were made by Statutory Authority after deduction of TDS. vi. Your Appellant craves leave to add, alter, modify and submit any other grounds during the course of hearing without prejudice. 2. Briefly stated facts of the case are that ....
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....greater than the maximum amount not chargeable to tax, where no return of income has been furnished or where return has been furnished for the first time under section 148, then the person shall be considered to have under-reported his income which would automatically attract the penalty under the section. In the instant case, the return of income was filed for the first time in response to notice u/s. 148. The income assessed is greater than the basic exemption limit and it is evident that the appellant has underreported his income. 5.6 It is further seen that the income was declared only after initiation of reassessment proceedings, and not voluntarily or suo motu. The appellant failed to file the return of income. Had notice u/s. 148 not been issued in the case of the appellant, the income would have escaped assessment. The AO has passed a very detailed order considering the submissions of the appellant. The argument of the appellant that income returned in response to 148 was accepted and the penalty is not leviable is not acceptable. The disclosure of the income was not voluntary but in consequence to of issuance of notice u/s. 148. Inspite of having taxable income, t....
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.... notice under section 148 of the Act. The entire tax liability, together with applicable interest under sections 234A, 234B and 234C and late filing fee, stood duly discharged prior to completion of the assessment proceedings. (ii) The entire income comprised salary and withdrawal from the Employees' Provident Fund, both of which were duly reflected in Form No.26AS and the Annual Information Statement (AIS). Taxes had already been deducted at source on the respective payments. No other source of income existed, nor was any income received outside the knowledge of the Department. Consequently, there was neither concealment nor under-reporting of income. (iii) It was further submitted that tax on the salary income had already been deducted by the employer. The only item requiring additional tax was the withdrawal of provident fund amounting to Rs.8,04,138/-, which the assessee bona fide believed to be exempt from tax. Immediately upon being apprised of its taxability, the assessee voluntarily discharged the entire tax liability together with applicable interest and late filing fee. Therefore, the omission was neither deliberate nor contumacious. (iv) It....
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....drawal from the Employees' Provident Fund. It was only on the basis of information available with the Department through its Risk Management System that reassessment proceedings were initiated under section 147. Thereafter, in response to notice issued under section 148, the assessee furnished the return of income declaring total income of Rs.35,95,150/-, which ultimately came to be accepted by the Assessing Officer without any variation. 4.2 The principal contention advanced on behalf of the assessee is that since no addition was ultimately made over and above the income declared in the return filed in response to section 148, there was no "under-reporting of income" within the meaning of section 270A and, consequently, the levy of penalty is unsustainable. It has also been urged that the entire salary income was subjected to tax deduction at source and reflected in Form No.26AS; therefore, there was neither any concealment nor any intention to evade tax. 4.3 We are unable to persuade ourselves to accept the aforesaid submissions. For ready reference, the relevant provisions regarding penalty for under reporting and misreporting are reproduced below:- "Penalty f....
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.... reassessed or recomputed and the amount of income assessed, reassessed or recomputed in a preceding order: ..................... Explanation.- For the purposes of this section,- (a) "preceding order" means an order immediately preceding the order during the course of which the penalty under sub-section (1) has been initiated; (b) in a case where an assessment or reassessment has the effect of reducing the loss declared in the return or converting that loss into income, the amount of under-reported income shall be the difference between the loss claimed and the income or loss, as the case may be, assessed or reassessed. (4) Subject to the provisions of sub-section (6), where the source of any receipt, deposit or investment in any assessment year is claimed to be an amount added to income or deducted while computing loss, as the case may be, in the assessment of such person in any year prior to the assessment year in which such receipt, deposit or investment appears (hereinafter referred to as "preceding year") and no penalty was levied for such preceding year, then, the under-reported income shall include such amount as is sufficient to ....
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....ly identifiable statutory events constituting "under-reporting of income" rather than upon the subjective concept of concealment. The legislative intent is evident from sub-section (2), which exhaustively specifies the situations in which a person shall be deemed to have under-reported his income. Clause (b) of section 270A(2) expressly provides that where no return of income has been furnished, and the income assessed exceeds the maximum amount not chargeable to tax, the assessee shall be regarded as having under-reported income. Correspondingly, section 270A(3)(i)(b) prescribes the method of quantification of such under-reported income, namely, the difference between the assessed income and the maximum amount not chargeable to tax in cases other than companies, firms or local authorities. 4.5 In the present case, admittedly no return of income was furnished under section 139(1). The income ultimately assessed at Rs.35,95,150/- was far in excess of the basic exemption limit. The statutory consequence envisaged under section 270A(2)(b) therefore automatically follows. The subsequent filing of a return only after issuance of notice under section 148 does not obliterate the initia....