Sanjay Kumar Vs ITO (ITAT Mumbai)
In the case Sanjay Kumar vs ITO, the Income Tax Appellate Tribunal (ITAT) Mumbai considered an appeal against the imposition of penalty under Section 271(1)(c) of the Income Tax Act for Assessment Year 2016–17. The penalty of ₹1,89,887 was levied on account of alleged concealment of dividend income, which the assessee voluntarily disclosed during scrutiny by submitting a revised return. The assessee argued that the error was unintentional, arising from his status as a “Resident but not Ordinarily Resident” and the dividend not being credited to his bank account. The dividend income was taxed in the USA, and a foreign tax credit was available under Section 90 of the Act.
The Assessing Officer and the Commissioner of Income Tax (Appeals) relied on the Supreme Court judgment in Mak Data (P) Ltd. to uphold the penalty. However, the ITAT found that the factual circumstances in Mak Data—which involved a tax survey and delayed disclosure—were materially different from the present case. In this instance, the assessee promptly corrected the omission, cooperated fully, and the discrepancy was minor compared to the total income declared (over ₹5.65 crore).
The ITAT noted the absence of mala fide intent, immediate acceptance of error, and availability of foreign tax credit, which indicated that the penalty under Section 271(1)(c) was not warranted. Consequently, the Tribunal held that the penalty imposed was unjustified and allowed the appeal, deleting the penalty order.
