TMI Blog2024 (4) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... the belief under which full/extended exemption of retirement benefit claimed in the ITR filed was in first not incorrect in its entirety and certainly it was bonafied and not synthetic one (ii) secondly, the explanation offered by the appellant in support of his mistaken but bonafied belief and disclosed all material facts of his service the circumstance which swayed to claim full exemption in his ITR in our considered view squarely falls within clause (a) of s/s (6) of section 270A, therefore pardonable (iii) and finally, the imposition of penalty is at the discretion of Ld. AO, since s/s (1) of section 270A of the Act, refers to the word 'may' and not as shall . The tax authorities below in our considered view were failed to appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to upward revision of claim of exemption of Gratuity to ₹ 20 Lakhs as against original claim of ₹ 10 Lakhs. The said ITR was initially processed u/s 143(1) of the Act and later subjected to complete scrutiny by a notice served u/s 143(2) of the Act. 2.2 While framing assessment u/s 143(3) of the Act, the Ld. AO made two additions viz; (a) addition of ₹ 10 Lakhs arising on account of restricting the claim of exemption of gratuity to ₹ 10 Lakhs u/c (ii) of section 10(10) of the Act as against the claim of ₹ 20 Lakhs made in revised ITR. (b) addition of ₹ 21,550/- being difference of interest income offered to tax as against the income reported in form 26AS. The assessee did not challenge the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w thereof in our considered view same cannot tantamount to under-reporting of income, consequently de-horses from attracting any penalty u/s 270A of the Act. 5. Insofar as the penalty imposed against disallowance of enhanced claim of gratuity exemption is concerned, we observed that, the appellant assessee was in service previously with Maharashtra Electricity Board [in short MSEB ] which was constituted in 1960 operating under the direct control of GoM. Owning to reforms by virtue of amendment brought in Electricity Act, 2003 the erstwhile MSEB demerged its three principal activities i.e. generation, transmission and distribution through restructuring and assigned it to three newly formed companies for the stated purpose. The appellant s e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e gratuity is concerned, undisputedly it was accrued to the appellant evenly throughout his service tenure. Therefore, the portion of gratuity which is accrued to him from the year of joining his services with MSEB upto the year of transfer of his service to MSEGCL was entitled to full exemption being Government Service. The balance gratuity thus represents accrued from MSEGCL being non-governmental service which alone can only be subjected to ceiling limit prescribed u/s 10(10)(ii) of the Act. However, the tax authorities have perfunctory pressed into service the ceiling without first analysing the facts holistically while dealing with assessment. In the penalty proceedings there were indifferent in dealing with the matter. 8. Having consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h in ITA NO. 1388/PUN/2023 AV Wandhekar Vs ITO. Dt. 08/03/2024. 9. Before parting, it is apt to note here that, the possibility of presence of doubt in the mind of Ld. AO while deciding the ceiling of exemption as to whether status of employment as at the time of joining or at the time of retirement is to be considered, cannot be completely ruled out. However, the Ld. AO disallowed the excess claim of exemption which stands fortified by the Hon ble Apex Court in CCE Vs Calcutta Springs [2008] 229 ELT 161(SC) which has been followed subsequently in landmark judgement CoC Vs Dilip Kumar Co reported in [2018] 9 SCC 1 (SC) wherein their Hon ble lordship have held that, in case of benefit of doubt or ambiguity in taxing the income, the benefit o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
