Chundayil Kalam Girijadevi (Deceased) Vs ITO (ITAT Cochin)
Cochin ITAT Deletes Penalty – Higher Gratuity Exemption Claim Not Misreporting- Bona Fide Claim Cannot Attract 270A Penalty -Mere Wrong Claim Not Misreporting
Assessee, a retired employee of Kerala State Finance Corporation, filed return on 06.08.2018 claiming exemption of ₹10 lakhs u/s 10(10) in respect of gratuity received on retirement. Subsequently, a revised return was filed enhancing claim of exemption to ₹20 lakhs relying on Notification S.O.1420(E) dated 29.03.2018.
AO held that enhanced exemption limit was applicable only for retirements on or after 29.03.2018, whereas the Assessee retired in FY 2017-18, hence claim was inadmissible. AO restricted exemption to ₹10 lakhs , assessed income at ₹36,89,900 & levied penalty of ₹2,20,000 u/s 270A(1) r.w.s. 270A(9) treating it as misreporting of income.
CIT(A) upheld AO’s action, rejecting Assessee’s contention that the claim was based on bona fide belief.
Before Tribunal, it was argued that all facts were fully disclosed, claim was made under bona fide impression, no facts were concealed & once AO clarified position, Assessee accepted disallowance, paid tax & did not challenge quantum. Hence, there was no misreporting & at best it was underreporting, which qualified for immunity u/s 270AA since tax was paid without appeal.
