ITAT Restricted Penalty to 50% as AO Nowhere Stated That Clause (8) of Sec. 270A Was Applicable

Case Details: Ashok Kumar Gupta vs. DOIT - [2024] 163 taxmann.com 1022 (Delhi-Trib.)

Judiciary and Counsel Details

• Kul Bharat, Judicial Member & Dr. B.R.R. Kumar, Accountant Member
• Shivam Garg, Adv. & Rahul Aggarwal, CA for the Appellant.
• Om Parkash, Sr.DR for the Respondent.

Facts of the Case

For the relevant assessment year, the assessee filed his return of income. The Assessing Officer (AO) completed the assessment under section 143(3), enhancing the assessee’s total income. Thereafter, the AO initiated penalty proceedings under section 270A.

While initiating the penalty proceedings under section 270A, the AO issued a notice calling upon the assessee to explain the under-reporting of income and why the penalty proceedings under section 270A could not be imposed for under-reporting his income. Considering the reply filed by the assessee, AO imposed the impugned penalty at 200% under section 270A.

On appeal, the CIT(A) sustained the penalty and the matter reached before the Delhi Tribunal.

ITAT Held

The Tribunal held that the assessee contended that the AO stated about under-reporting income throughout the notice for imposing the penalty and also in the impugned order. But while imposing the penalty, he invoked the provision related to the misreporting of income.

The AO issued a notice invoking the provision of section 270A. From the notice, it was clear that the assessee was called upon to explain the under-reporting of income. However, while imposing the penalty under section 270A, the AO imposed a penalty at the rate of 200%, which falls under clause (8) of section 270A.

Since it was the case of the Assessing Officer that the assessee had under-reported his income and the Assessing Officer nowhere states that clause (8) of section 270A was applicable, the AO ought to have restricted the penalty to the extent of 50%, which was leviable for under-reporting of the income.

List of Cases Reviewed

• Alrameez Construction (P.) Ltd. v. CIT/NFAC, Delhi (Para 10) followed.

List of Cases Referred to

• Alrameez Construction (P.) Ltd. v. CIT/NFAC, Delhi [2023] 152 taxmann.com 382 (para 6).