Manish Manohardas Asrani Vs ITO Int Tax Ward (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai, ruled in favor of the assessee, Manish Manohardas Asrani, quashing a penalty of ₹44,90,048 levied under Section 270A(8) of the Income Tax Act, 1961. The tribunal held that the penalty notice lacked specificity regarding the charge—whether it pertained to underreporting or misreporting of income.
The assessee filed his return of income for the Assessment Year 2019-20, declaring ₹26,35,970 as total income. Following scrutiny proceedings, discrepancies arose concerning salary disclosures. The assessee initially reported ₹27,79,510 under the “Salaries” head, but records from Form-16 and Form 26AS revealed a gross salary of ₹91,13,252.
During proceedings, the assessee claimed the discrepancy resulted from an oversight and later rectified the error. However, the Assessing Officer (AO) rejected the explanation, citing intentional evasion. Consequently, the AO added ₹62,93,742 to the taxable income and levied a penalty.
Key Contentions
A. Assessee’s Argument
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- Non-Resident Status: The assessee argued that part of his salary was earned abroad and deposited in a foreign account, leading to confusion in reporting.
- Notice Deficiency: The penalty notice under Section 270A failed to specify whether the charge related to “underreporting” or “misreporting,” violating procedural requirements.
- Subsequent Correction: The error was rectified during the scrutiny process, and taxes were duly paid.
B. Revenue’s Argument
The Revenue contended that the penalty was justified as the error would not have surfaced without scrutiny. The AO maintained that the assessee deliberately misreported income to evade taxes.
Tribunal’s Observations
