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TMI Blog2025 (1) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... The return was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') on 16.12.2017. Subsequently, the case was selected for scrutiny under CASS and statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee, in response to which the AR of the assessee appeared before the Assessing Officer from time to time and filed the requisite details. 4. During the course of assessment proceedings the Assessing Officer noted that in the tax audit report the auditor has shown the service tax liability of Rs. 37 lakh which was not paid on or before the due date. The assessee while filing the return of income was supposed to add back the above amount which was not done. The Assessing Officer, therefore, asked the assessee to explain as to why the said amount of the liability of Rs. 37 lakh has not been added back to the total income of the assessee. Rejecting the various explanations given by the assessee and invoking the provisions of section 43B of the Act, the Assessing Officer made addition of Rs. 37 lakh to the total income of the assessee. 5. Similarly, on account of late payment of employees' contribution to PF and ESI, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs u/s 270A were initiated. Further, the assessee did not pay Employees contribution towards Provident fund Rs. 11,556/- to the government account within the time limit due. The amount was accordingly disallowed and penalty proceedings initiated separately. In penalty proceedings, AO imposed 200% of the amount of tax payable on under- reported income as per section 270A for under reporting of income in consequence of mis-reporting. Aggrieved, assessee is in appeal. In appeal, assessee has pleaded that they have made unintentional mistake erroneously. The submission of the assessee is unacceptable because the assessee is a company and is assisted by professionals in work related to tax matters. Any possible purported "mistake" would have been caught at various stages by professionals if not at the time of filing of return, then subsequently and assessee could have corrected the purported "mistake" by filing belated return. In this case, what was pointed out by auditor has been omitted by the assessee There is no way in which such a purported "error" or "mistake" can be made when the facts have been pointed out by the Audit report. Had the case not been taken up in scrutin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble Delhi High Court in the case of Schneider Electric South East Asia (Hq) Pte Ltd. vs. ACIT vide W.P.(C) 5111/2022 & C.M. Nos.15165-15166/2022, order dated 28.03.2022, she submitted that the Hon'ble Delhi High Court in the said decision has held that in absence of any whisper as to which limb of section 270A of the Act is attracted and how the ingredient of sub-section (9) of section 270A is satisfied, the penalty levied by the Assessing Officer is not in accordance with law. 12. Referring to the decision of the Delhi Bench of the Tribunal in the case of ACIT vs. Mahashian Di Hatti Pvt. Ltd. vide ITA No.1484/Del/2024, dated 08.08.2024, she submitted that under somewhat similar circumstances the Tribunal upheld the action of the Ld. CIT(A) / NFAC in deleting the penalty levied u/s 270A of the Act and the appeal filed by the Revenue was dismissed. 13. Referring to the decision of the Hon'ble Delhi High Court in the case of Prem Brothers Infrastructure LLP Vs NFAC (2022) 142 taxmann.com 38 (Delhi) she submitted that the Hon'ble High Court in the said decision has held that where penalty was levied on assessee under section 270A alleging misreporting of income, however, fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961. Rejecting the various explanations given by the assessee, the Assessing Officer levied penalty @ 200% of the amount of tax payable on under-reporting of income in consequence of mis-reporting as per the provisions of section 270A of the Act. We find the Ld. CIT(A)/ NFAC sustained the penalty so levied by the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that in the intimation issued u/s 143(1) of the Act, no such adjustment has been made. Further, notice issued u/s 274 r.w.s. 270A of the Act, dated 15.10.2019 and the show cause notice issued u/s 270A dated 27.02.2021 do not show as to under which limb of section 270A of the Act, such penalty proceedings have been initiated. It is also her submission that all the details were available in the audit report and therefore, it cannot be held that there is mis- representing of any income. It is also her submission that in view of the decision of the Hon'ble Supreme Court in the case of Price Waterhouse Coopers (P.) Ltd. vs. CIT (supra) that penalty could not be imposed for a mistake on account of failure on the part o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. In that sense, even the Assessing Officer seems to have made a mistake in overlooking the contents of the Tax Audit Report. 19. The contents of the Tax Audit Report suggest that there is no question of the assessee concealing its Income. There is also no question of the assessee furnishing any inaccurate particulars. It appears to us that all that has happened in the present case is that through a bona fide and inadvertent error, the assessee while submitting its return, failed to add the provision for gratuity to its total income. This can only be described as a human error which we are all prone to make. The calibre and expertise of the assessee has little or nothing to do with the inadvertent error That the assessee should have been careful cannot be doubted, but the absence of due care, in a case such as the present does not mean that the assessed is guilty of either furnishing inaccurate particulars or attempting to conceal its income. 20. We are of the opinion, given the peculiar facts of this case, that the imposition of penalty on the assessee is not justified. We are satisfied that the assessee had committed an inadvertent and bona fide error and had not intended to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard to the nature and quantum of the income alleged to be under reported, is bona fide within the meaning of sub-section (6) of section 270A, and the appellant has disclosed all the material facts to substantiate the said explanation. 6.3 In the present case, AO has levied penalty at a higher rate of 200 percent, under sub-section (8) of section 270A in respect of the under reported income, holding the same to be in consequence of misreporting of income. The instances of misreporting of income have been enumerated under clause (a) to clause (f) of sub-section (9) of section 270A. AO has not specifically mentioned the relevant clause of sub-section (9) of section 270A, which is sought to be invoked in this case. AO has only mentioned that the appellant has committed default of misrepresentation and suppression of facts. However, in view of the facts stated above, I am constrained to disagree with the findings of AO in this regard. The excess claim of depreciation, which is the subject matter of addition, was a result of oversight in adopting an incorrect figure for the opening WDV for block of assets. It has already been brought out in preceding paragraphs that both the figures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire proceeding was not only erroneous but also arbitrary and bereft of any reason. 6.6 Hon'ble Delhi High Court ("the jurisdictional High Court") in the case of Prem Brothers Infrastructure LLP Vs NFAC (2022) (142 taxmann.com 38 (Delhi) has held that where penalty was levied on assessee under section 270A alleging misreporting of income, however, fact that assessee had furnished all details of transactions relating to disallowance made under section 14A and Assessing Officer as well as assessee had used same details to arrive at different quantum of disallowances, this by no stretch of imagination could be held to be 'misreporting' and further, in absence of details as to which limb of section 270A was attracted, impugned penalty order was to be quashed and revenue was to be directed to grant immunity under section 270AA. 7. In view of the facts and circumstances of the case, and the prevailing position of law, I find that this is a not a case of under-reporting or misreporting of income, within the meaning of section 270A of the Act. The alleged under-reporting by way of excess claim of depreciation was made purely as a result of oversight, for which a bona fide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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