Kaushal Jugal Taparia Vs DCIT (ITAT Ahmedabad)
The ITAT Ahmedabad partly allowed the assessee’s appeal and deleted the penalty of ₹41,602 levied under Section 270A of the Income-tax Act, 1961 for Assessment Year 2019-20. The assessee’s deduction of ₹1,00,000 claimed under Section 80GGC in respect of donation to Yuva Jan Jagriti Party had been disallowed during reassessment, following which penalty was imposed at 200% of tax on the alleged under-reported income on the ground of misreporting. The Tribunal noted that both parties agreed the issue was covered by the Ahmedabad Bench decision in Hiro Mulchand Tanwani Vs. ITO. Following that decision, and observing that there was no change in the factual matrix or legal proposition, the Tribunal deleted the penalty. It also recorded that the Assessing Officer had failed to specify the particular limb of Section 270A(9) under which the penalty was levied, and held that, for this reason also, the penalty for under-reporting in consequence of misreporting could not be sustained. Ground No. 1 was allowed, the remaining grounds were dismissed as academic/infructuous, and the appeal was partly allowed.
Ratio. Mere disallowance of deduction claimed under section 80GGC for donation to a political party does not automatically amount to misreporting of income under section 270A(9). In the absence of evidence of false particulars, suppression of facts or deliberate misrepresentation, the enhanced penalty for misreporting cannot be sustained. Further, failure of the Assessing Officer to specify the particular limb of section 270A(9) under which penalty is levied is fatal to the validity of the penalty.
