Mohd. Sarwar Vs ITO (ITAT Hyderabad)
The case of Mohd. Sarwar Vs ITO at the ITAT Hyderabad delves into the intricacies of taxation law, particularly regarding penalty orders. Despite allegations of misreporting, the crux of the matter was the under-reporting of income.
The appellant contested a penalty amounting to Rs. 4,44,844/- under section 270A of the Income Tax Act for the assessment year 2018-19. The crux of the appellant’s argument lay in the discrepancy between the initial notice of demand under section 156 and the subsequent penalty order under section 270A. The appellant argued that the penalty order should have been based solely on under-reporting of income, not misreporting.
During the assessment proceedings, it came to light that the appellant had initially filed a revised return of income, reducing the declared income substantially. However, discrepancies arose regarding claimed deductions and refund amounts, leading to an investigation into the matter.
The Assessing Officer (AO) concluded that the appellant had under-reported income, resulting in the imposition of a penalty. However, the appellant contended that the filing of the revised return was done without their knowledge by their tax consultant, alleging fraud.
The crux of the dispute lay in whether the appellant was culpable for misreporting or under-reporting income. The AO’s contention was that the revised return, despite being filed allegedly without the appellant’s knowledge, aimed at reducing tax liability, indicating under-reporting.
