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2023 (9) TMI 755 - ITAT MUMBAILevy of penalty u/s 270A - assessee not offering the interest on income tax refund while filing its return of income - HELD THAT:- As return filed by the assessee was selected for limited scrutiny only for the purpose of examination of foreign assets vide notice dated 09/08/2018, issued u/s 143(2) of the Act and no notice was issued regarding interest of income tax refund received by the assessee. Therefore, it is not a case, wherein pursuant to scrutiny assessment proceedings the assessee decided to offer the income tax. Thus, no merits in the findings of the AO that the assessee chose to disclose the interest only after the case was selected for limited scrutiny - unless the refund is received, the interest element of the refund cannot be determined. It is also pertinent to note that the suo moto declaration of interest on income tax refund, as offered by the assessee during the assessment proceedings, has been accepted vide order passed u/s 143(3) of the Act without modification of the revised computation in this regard. Therefore, we are of the view that the explanation of the assessee for not offering the interest on income tax refund while filing its return of income is bona fide, and thus, the non-declaration of interest on income tax refund cannot be said to be under-reporting of income by the assessee within the meaning of section 270A of the Act. Accordingly, we direct the AO to delete the penalty levied u/s 270A in the present case. As a result, ground raised in assessee’s appeal is allowed.
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