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TMI Blog2025 (5) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... onal trust. The assessee is registered u/s 12A of the Act and therefore claiming its income as exempt under the provisions of section 11(1) of the Act. For the A.Y. 2017-18, the assessee filed its return of income on 06/11/2017 declaring total income of Rs. NIL. The case of the assessee was selected for scrutiny under CASS. During the course of assessment proceedings, the Ld. AO found that the assessee has claimed excess expenditure towards the application of income and seeked explanation from the assessee. Pursuant thereto, the assessee filed revised computation showing the application of income to the extent of Rs. 52,40,60,509/- as against the income of Rs. 58,75,26,422/-. The assessee contended before the Ld.AO that non-application of income u/s 11(1)(a) of the Act is within the permissible limit of 15%. The assessee also contended that even otherwise, the assessee inadvertently claimed excess application of income to the extent of Rs. 6,34,65,822/- and the same has no tax effect as the income of the assessee is fully exempt. The contentions of the assessee were not found to be acceptable by the Ld. AO. However, the Ld.AO vide his order dated 30/12/2019 passed u/s 143(3) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of tax of Rs. 1,81,27,447/- payable on under-reporting income of Rs. 6,04,24,824/- as per the provisions of 270A of the Act. 3. Aggrieved, the assessee filed appeal before the Ld. CIT(A) challenging the penalty of Rs. 90,63,723/- imposed by the Ld.AO u/s 270A of the Act. Before the Ld. CIT(A), the assessee furnished its written submissions which are recorded by the Ld. CIT(A) in para 6.4 of his appellate order. The Ld.CIT(A), after considering the submissions of the assessee, deleted the penalty imposed by the Ld. AO observing that for levy of penalty u/s 270A of the Act, assessed income should be greater than the processed income u/s 143(1)(a), however, in the present case of the assessee, the assessed income is not exceeding the income determined u/sec. 143(1)(a) of the Act. The Ld. CIT(A) further observed that the assessee himself filed revised computation of income showing the correct revenue expenditure. Also, the excess claim of expenditure is falling within the statutory limit of accumulation @ 15% on Rs. 58,75,26,422/- (declared as per income and expenditure account). The relevant observations and findings of the Ld. CIT(A) are reproduced below:- "6.4. During the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has no effect on reducing loss or conversion of loss into income. In Trust's case, there is no concept of loss and deficit is not/adjustable to subsequent years" As can be seen from the above, for levy of penalty u/s. 270A of the Act the assessed income should be greater than the processed income u/s. 143(1)(a) of the Act. But, in the instant case, the assessed income is not exceeding the income determined u/s. 143(1)(a). After considering facts and circumstances of the case, it is held that the appellant himself filed a revised/correct computation of total income by taking the correct revenue expenditure of Rs. 48,77,87,634/- and also the excess claim of Rs. 6,04,24,824/- is within the limit of statutory accumulation @15% on Rs. 58,75,26,422/- (declared as per Income & Expenditure A/c) comes to Rs. 8,81,28,963/- and hence the AO is directed to delete the levy of penalty amounting to Rs. 90.63,723/-." 4. Dissatisfied by the impugned order of Ld. CIT(A), the Revenue is in appeal before this Tribunal by raising the following grounds of appeal:- "01. On the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the penalty imposed under section 270A of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 07. On the facts and circumstances of the case, the Ld. CIT(A), has erred in accepting the contention of the assessee that even after enhancing the revenue expenditure to the tune of Rs. 6,04,24,824/- and reducing the amount to be accumulated, there is no under reporting of income just because the excess claim of revenue expenditure is within the 15% of total receipts and if so being the case the CIT(A) has erred to adjudicate that it is only when such enhancement of revenue expenditure exceeds 15% of total receipt that there will be income of the assessee and there will be penal provisions. 08. On the facts and circumstances of the case, the Ld. CIT(A), has failed to appreciate that allowing adventure to claim erroneous revenue expenditure without any penal implication would render other provisions of the Act as regards filing of form 9A, Form 10 & monitoring of the other accumulated amounts including deemed application of 15% and liability of the assessee to adhere to such provision in jeopardy and such inference may not be in concurrence with harmonious interpretation of the statute. 09. On the facts and circumstances of the case, the Ld. CIT(A), has failed to apprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 270A of the Act and thereafter arrived at the finding that there is no under-reporting of income by the assessee. On going through the provisions of section 270A(2), we find some force in the arguments advanced by the Ld. AR before us that none of the conditions specified under clause (a) to (g) of the said section required for levy of penalty for underreporting of income, are met in the case of the assessee. Further, the Revenue also seems to be aggrieved by the finding of the Ld. CIT(A) that the excess claim of expenditure made by the assessee is within the permissible statutory limit of 15% u/s 11(1)(a) of the Act. The contention of the Revenue is that the discrepancy between the claimed and actual revenue expenditure indicates a deliberate attempt on the part of the assessee to under-report income and therefore, the Ld. CIT(A) was not justified in deleting the penalty imposed by the Ld. AO. We do not find any substance in this argument of the Revenue as admittedly the assessee itself filed a revised computation of total income by taking the correct revenue expenditure of Rs. 48,77,87,725/- as against Rs. 54,82,12,549/- which was inadvertently taken at the time of filing the r ..... 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