TMI Blog2023 (7) TMI 649X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri M.G. Jasnani, DR ORDER PER BENCH: These appeals preferred by the assessee emanates from the separate orders of National Faceless Appeal Centre [NFAC], Delhi, each dated 26.04.2023 for A.Ys. 2017-18 2018-19 as per the grounds of appeal on record. 2. The common and solitary grievance of the assessee in both these appeals is the confirmation of levy of penalty u/sec. 270A of the Act. 3. We shall take up ITA No. 612/PUN/2023 as the lead case for illustration of facts and adjudication. It has been conceded by the parties herein that the facts and circumstances and the issues involved in both the years of appeal are absolutely identical and similar, therefore, these cases were heard together and were disposed of vide this consolidated order. 4. The relevant facts of the case are that assessee is an individual and derives income from salary, filed his return of income declaring total income of Rs. 4,22,340/- after claiming deduction under chapter VI-A of Rs. 2,35,000/-. Subsequently, a survey was conducted u/sec. 133A of the Act on the assessee s ITP, and on the basis of the information from Inv. Wing, the case of the assessee was reopened by issue of notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee to explain the mechanics of these differences between the original return and that filed in response to notice u/s 148. However, the assessee has responded on 28/03/2023 stating that he has nothing further to state in respect of the difference between the figures of Gross Total Income and Chap VI A deduction between the original return and the later return. The facts on record thus indicate that admittedly the assessee has originally returned a lower gross total income and an inflated Chap VI A deduction, and has offered no explanation regarding the same. 5.3 Similarly, in the AY 2018-19, the gross total income as per original return is Rs. 7,46,015 as against Rs. 9,26,047 is the return filed in response to notice u/s 148, and is under reported by Rs. 1,80,000. The Chap VI A deduction is claimed at Rs. 3,55,000 in the original return as against Rs. 1,50,000 claimed in the later return and is inflated by Rs. 1,55,000. 5.4 Sec 270A(1) is the charging section for levy of penalty and sec 270A(2) lays down situations in which an assessee is considered to have under reported his income. The case of the assessee for both AYs would fall in sec 270A(2)(a) as the assessed income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der reporting of income as a consequence of mis-reporting thereof, sec.270A(8) and (9) would operate and a higher penalty is prescribed. Mis-reporting is defined in sec. 270A(9) and the case of the assessee would fall under clause (a) for suppressing the gross total income and under clause (c) for claiming a higher deduction under Chap VI A not substantiated by any evidence. The assessee has evidently declared a lower salary than that reported by his employer in Form 16, and further has not disclosed the basis of such under reporting when specifically asked by me to do so. This action of the assessee would clearly be construed as misrepresentation or suppression of facts. Similarly, in case of the inflated claim under Chap VI A, the assessee has not revealed the basis on which a higher claim was made, in spite of being specifically requested by me. Based on the facts as discussed above, I am of the view that the assessee has clearly mis-reported his income as defined in sec 270A(9) and therefore the AO has correctly levied penalty @200% as prescribed. The scheme of the section as evident from the language is that a mere under reporting attracts penalty of 50% with certain excl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 3,55,000/- in the original return as against Rs. 1,50,000/- claimed in the later return and was inflated by Rs. 1,55,000/-. In this case, as evident from the order of the NFAC, assessee has offered no explanation as to why the gross total income was understated causing misreporting of income in the original return in spite of Form 16 issued by the employer, and similarly there was no explanation given by the assessee as to why chapter VI-A deductions were inflated. That, as rightly observed by the NFAC for both these years, it was a clear case of misreporting of income as defined u/sec. 270A(9) of the Act, which is preceded by sec.270A(8) of the Act which begins with a non-obstante clause. Sec.270A(8) and (9) specifies that in case of under-reporting of income as a consequence of mis-reporting thereof, sec. 270A(8) and (9) would operate and a higher penalty is prescribed. As per the provisions of clause (a) (c) of sec. 270A(9), the assessee has mis-reported his income. The scheme of the provisions provides that if it is a case of under-reporting, it attracts penalty of 50% with certain exclusions, but if it is a case of mis-reporting, it attracts higher penalty of 200%. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... io on the principle that fraud vitiates everything. The ratio of this decision squarely applies to the conduct of the present assessee before us as he had done fraud with the Revenue by misreporting his income in the return filed for evading tax. Further, the application of principle of fraud was considered by the Hon'ble Supreme Court in the case of Badami (deceased) by her LRs v. Bhali in Civil Appeal No. 1723/2008, dated 22/05/2012 wherein the Hon'ble Supreme Court has held as follows:- 20. In S. P. Chengalvaraya Naidu (dead) by L.Rs. v. Jagannath (dead) by L.Rs. and others AIR 1994 SC 853 this court commenced the verdict with the following words:- Fraud-avoids all judicial acts, ecclesiastical or temporal observed Chief Justice Edward Coke of England about three centuries ago. It is the settled proposition of law that a judgment or decree obtained by playing fraud on the court is a nullity and non est in the eyes of law. Such a judgment/decree - by the first court or by the highest court - has to be treated as a nullity by every court, whether superior or inferior. It can be challenged in any court even in collateral proceedings. 21. In the said cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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