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TMI Blog2023 (3) TMI 1472X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the substantive legal ground orbits alleging violation of principle of natural justice and non-application of mind on the part of Ld. AO while dealing with imposition of penalty u/s 270A of the Act. 4. Both the parties laid their rival contentions and after hearing them at a length, we have perused the case records in the light of rule 18 of ITAT, Rules 1963 and freezed the following undisputed facts for adjudication; 4.1 The appellant assessee is a salaried employee had filed his original return of income [in short 'ITR'] u/s 139(1) of the Act on 19/07/2017 declaring income of Rs.8,82,790/- after claiming deduction u/c VI-A for sum of Rs.1,65,284/-. 4.2 Subsequently the assessee revised his ITR u/s 139(5) of the Act thereby slicing down the total income to Rs.4,90,810/- consequent to higher claim of deduction u/c VI-A of Rs.3,59,844/- as against original claim of deductions made in original return filed u/s 139(1) of the Act. 4.3 A survey action u/s 133A of the Act was carried out on a third party wherein certain information about the appellant was gathered which was shared by the Investigation wing to the jurisdiction AO of the assessee. Pursuant to such information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheer under-reporting us/s (7) of section 270A of the Act. 7. We are mindful to the evolution of present penalty law, whereby the legislature in his highest wisdom has brought-in this new simplified penalty scheme through insertion of section 270A with a pre-dominant intent to end highly debated and litigated provision of section 271(1)(c) of the Act. And in this context it shall be apt to note the 'Explanatory Memorandum' to the provisions of Finance Bill, 2016 which explains the objective behind inserting this section 270A vide para 62.1 CBDT Circular 3/2017 (F. No. 370142/20/2016-TPL) as; "Under the existing provisions, penalty on account of concealment of particulars of income or furnishing inaccurate particulars of income is leviable under section 271(1)(c) of the Income-tax Act. In order to rationalise and bring objectivity, certainty and clarity in the penalty provisions, it is proposed that section 271 shall not apply to and in relation to any assessment for the assessment year commencing on or after the 1st day of April, 2017 and subsequent assessment years and penalty be levied under the newly inserted section 270A with effect from 1st April, 2017. The new section 270A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a principle of natural justice even before imposing a petty penalty, then we are unable to comprehend as to what stopped the lower tax authorities in outstepping from principle of natural justice while dealing with impugned penalty proceedings. 12. In adjudicating the issue under consideration we are heedful to state that, the penalty provisions of section 270A like provision of section 271(1)(c) are detrimental, albeit commercial consequences and being mandatory brooks no trifling or dilution therewith. Thus a contravention of a mandatory condition or requirement is fatal with no further proof and as a result in our considered view the ratio decidendi laid in context of section 271(1)(c) of the Act by the Hon'ble Supreme Court in ‚Dilip N Shroff Vs JCIT‛ reported in 291 ITR 519 (SC) and ‚Ashok Pai Vs CIT‛ reported at 292 ITR 11(SC), further by Jurisdictional Bombay High Court in plethora judgements including ‚CIT Vs Samson Pericherry‛, ‚PCIT Vs Goa Dorado‛ and ‚PCIT Vs New Era Sova Mine‛ shall still hold good even in impugned penal proceedings of section 270A of the Act. 13. Having aforesaid, in our opinion, the non-app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under reporting of income in consequence of misreporting" thereof. The same admittedly pertained to the assessee's chapter-VIA deduction claims raised to the tune of Rs.3,59,844/- in his revised return as against that of Rs.1,65,284/- in the original one which was reduced to Rs.1,70,727/- in the former assessment year 2017- 2018. The corresponding figures in the latter assessment year 2018-2019 read Rs.3,71,686/- and Rs.1,77,924/- respectively. 3. I now advert to the section 270A proceedings in issue. The Assessing Officer's twin penalty orders, both dated 14.01.2022, rejected the assessee's stand to impose these penalties of Rs.1,64,392/- i.e., @ 200% of the tax sought to be evaded of Rs.82,196/- holding "under reporting of income which is in consequence of misreporting of income" amounting to Rs.3,99,010/- in the former assessment year 2017-2018 and Rs.1,51,866/- in assessment year 2018-2019, for taxes sought to be evaded of Rs.75,933/- regarding the income in issue of Rs.3,68,610/- respectively. 3.1. The learned NFAC's identical detailed discussion has affirmed the impugned penalties as under : "5. It's an admitted fact that the appellant filed revised return claiming false ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty provisions" as per the CBDT's circular no.3/2017 [F.No.370142/20/2016-TPL]. Mr. Sonawane strongly argued in tune thereof that the very line of reasoning is required to be adopted herein as well whilst dealing with penalty proceedings under this new scheme of u/s.270A introduced by the legislature by the Finance Act, 2016 w.e.f. 01.04.2017. 5. Mr. Murkunde on the other hand strongly supported the learned lower authorities action imposing the impugned penalties. He took us to the Assessing Officer's corresponding assessments, penalty orders as well as the lower appellate discussion extracted in the preceding paragraphs that the rigor of sub-section (9) stands duly complied with once it has been categorically concluded that this is a fit case to impose penalty u/sec.270A of the Act for "under reporting which is in consequence of misreporting of income". His further contention is that such a penalty @ 200% is levied u/sec.270A(8) of the Act reading as under : "Sec.270A(8) - Notwithstanding anything contained in subsection (6) or sub-section (7), where under-reported income is in consequence of any misreporting thereof by any person, the penalty referred to in sub-section (1) s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty orders as well the NFAC's detailed discussion, the learned lower authorities have nowhere specified the corresponding "sub-limbs" (a to f) in sub-sec.(9) of sec.270A of the Act. That being the case, I wish to quote para 62.10 in the CBDT's circular no.3/2017 (supra) making it explicitly clear that these six clauses (a to f) would indeed form part of sub-section (8) to sec.270A as under : "62.10 The rate of penalty shall be fifty per cent of the tax payable on under-reported income. However in a case where under reporting of income results from misreporting of income by the assessee, the person shall be liable for penalty at the rate of two hundred per cent of the tax payable on such misreported income. The cases of misreporting of income have been specified as under : (i) misrepresentation or suppression of facts; (ii) non-recording of investments in books of account; (iii) claiming of expenditure not substantiated by evidence; (iv) recording of false entry in books of account; (v) failure to record any receipt in books of account having a bearing on total income; (vi) failure to report any international transaction or deemed international transaction under C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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