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TMI Blog2025 (5) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... ded the proceedings without appreciating the genuineness of the Valuation report of the building obtained from Registered Valuer after the Construction i.e., dated 31.03.2009 to determine the value of building for the purpose of Bank Loan. 4 For the above and other grounds to be urged during the hearing of the appeal the Appellant prays that the appeal be allowed, and the addition made by the Assessing Officer and sustained by the Commissioner of Income Tax (Appeals) be deleted in the interest of equity and justice. 3. Brief facts of the case are that assessee being an individual had not filed his return of income for the assessment year 2018-19. The case was reopened on the basis of information flagged by Insight Portal that the assessee has received interest of Rs. 0.18 lakhs, received contractual receipt of Rs. 176.81 lakhs, sold property for a total consideration of Rs. 126.93 lakhs and paid Rs. 1,000/- to nonresidents. Accordingly, notice u/s 148 of the Act was issued and in response to same, the assessee filed return of income on 28.4.2022, wherein the assessee declared loss of Rs. 1,02,80,375/- from business and profession and long term capital gains of Rs. 20,68,361/- fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y @ 200% on above Rs. 38,05,290/- 3.3 Aggrieved by the penalty order passed u/s 270A of the Act dated 22.8.2023, the assessee has preferred an appeal before the ld. CIT(A)/NFAC. The ld. CIT(A)/NFAC dismissed the appeal of the assessee on the ground that assessee has under reported the income in the return of income. It is only because of the revenue action, the under reporting of income was unearthed. The assessee accepted the addition and stated that due to non-availability of the bills, he had admitted the said disallowances. Further, the ld. CIT(A) noticed that assessee's case does not fall in the exceptions provided in levy of penalty and no immunity from the levy of penalty is applicable to the fact of the assessee's case. Therefore, the penalty was rightly levied on the amount of tax payable on under reporting of income as a consequence to mis reporting and accordingly upheld the same. 3.4 Aggrieved by the order of ld. CIT(A)/NFAC dated 18.7.2024, the assessee has filed the present appeal before this Tribunal. The assessee has filed the paper book comprising 100 pages containing therein documents/records filed before the lower authorities as well as case laws relied upon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mis reporting of income. The AO himself is confused under which limb the assessee is liable for penalty u/s 270A of the Act. 5.1 For the purpose of evaluating the correctness of rival submissions addressed, we deem it apposite to extract section 270A of the Act herein below: "270A. Penalty for under-reporting and misreporting of income. (1) The Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner may, during the course of any proceedings under this Act, direct that any person who has under-reported his income shall be liable to pay a penalty in addition to tax, if any, on the under-reported income. (2) A person shall be considered to have under-reported his income, if- (a) the income assessed is greater than the income determined in the return processed under clause (a) of sub-section (1) of section 143; (b) the income assessed is greater than the maximum amount not chargeable to tax, where no return of income has been furnished or where return has been furnished for the first time under section 148; (c) the income reassessed is greater than the income assessed or reassessed immediately before such reassessment; (d) the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions contained in section 115JB or section 115JC; D = the total income that would have been chargeable had the total income assessed as per the provisions contained in section 115JB or section 115JC been reduced by the amount of under-reported income: Provided further that where the amount of under-reported income on any issue is considered both under the provisions contained in section 115JB or section 115JC and under general provisions, such amount shall not be reduced from total income assessed while determining the amount under item D. Explanation.-For the purposes of this section,- (a)"preceding order" means an order immediately preceding the order during the course of which the penalty under sub-section (1) has been initiated; (b)in a case where an assessment or reassessment has the effect of reducing the loss declared in the return or converting that loss into income, the amount of under-reported income shall be the difference between the loss claimed and the income or loss, as the case may be, assessed or reassessed. (4) Subject to the provisions of sub-section (6), where the source of any receipt, deposit or investment in any assessment year is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the material facts relating to the transaction; and (e) the amount of undisclosed income referred to in section 271AAB. (7) The penalty referred to in sub-section (1) shall be a sum equal to fifty per cent of the amount of tax payable on under-reported income. (8) Notwithstanding anything contained in sub-section (6) or sub-section (7), where underreported income is in consequence of any misreporting thereof by any person, the penalty referred to in sub-section (1) shall be equal to two hundred per cent of the amount of tax payable on under-reported income. (9) The cases of misreporting of income referred to in sub-section (8) shall be the following, namely:- (a) misrepresentation or suppression of facts; (b) failure to record investments in the books of account; (c) claim of expenditure not substantiated by any evidence; (d) recording of any false entry in the books of account; (e) failure to record any receipt in books of account having a bearing on total income; and (f) failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven by the legislature to give a leave to the Assessee. 3. If the assessee is not able to controvert the charge of under reporting, the under reporting gets confirmed. 4. Once the charge of underreporting is confirmed, then the AO has to establish whether the underreporting is in consequence of any of the clauses (a) to (f) of Section 270A(9) of misreporting. If Yes, under which clause (limb) the assessee has misreported the income? 5.3 Therefore, we are of the considered opinion that without the charge of under reporting of income, the AO cannot straightaway jump with the charge of misreporting of income. In the present case the AO without even a whisper as to how the ingredient of sub-section (2) of section 270A is satisfied, has also not specifically mentioned the exact limb of misreporting as per section 270A(9) of the Act. Further, the AO stated under reported income amounting to Rs. 91,47,331/- in his penalty order but levied 200% penalty. 5.4 By respectfully following the judgment of Hon'ble High court of Delhi in the case of Schneider Electric South East Asia (HQ) PTE Ltd. V. Commissioner of Income Tax (International Taxation) & Ors. (2022) 443 ITR 186, we are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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