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2023 (7) TMI 346 - AT - Income TaxLevy of penalty u/s 270A r.w.s. 274 - underreporting of income - addition on account of interest earned from banks - HELD THAT:- Assessee explained that he was under impression that being retired person he is senior citizen and interest income is exempt under section 80TTB, thus find merit in the submissions of assessee.AO initiated penalty on interest income for under reporting of income, however, at the time of levying penalty it was levied for misreporting of income thus, no penalty for misreporting income is justified on this addition. Hence, I direct to delete penalty u/s 270A on such addition. Salary income - misreporting of income on the addition of leave encashment - Exemption u/s 10(10AA) - Assessee explained that initially he was employed Gujarat State Electricity Board, an organ of State Government, which was splitted in to seven state owned company and that he was under the bonafide belief that he is Government employee and that he has disclosed all the particulars of his income. Thus, he was under bonafide belief of State Government employee. It is settled position under law that levy of penalty is not automatic on mere making addition, if the assessee has explained his bonafide belief about deduction of exemption of any component of income, no penalty is leviable on such component of income. Hence, no penalty u/s 270A is leviable on the addition of leave encashment. In the result, the grounds of appeal raised by the assessee are allowed. Decided in favour of assessee.
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