Tasavver Husain Vs ACIT (ITAT Agra)
The Agra Bench of the Income Tax Appellate Tribunal (ITAT) allowed both appeals filed by the assessee against separate orders of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), confirming penalties under Sections 270A and 272A(1)(d) of the Income-tax Act for Assessment Year 2017-18.
Penalty under Section 270A
The first appeal concerned a penalty of Rs. 19,381 levied under Section 270A for under-reporting of income. The Assessing Officer (AO) held that the assessee had under-reported income derived from operating a Mother Dairy milk booth. Since the assessee had filed the return beyond the prescribed time, the AO treated it as an invalid return, obtained turnover details from Mother Dairy, estimated the business profit by applying a net profit rate of 1.30%, and initiated penalty proceedings under Section 270A. As no response was received to the penalty notices, the AO concluded that the case involved conscious under-reporting and misreporting of income and levied penalty at 50% of the tax payable on the under-reported income, which was upheld by the CIT(A).
The Tribunal held that Section 270A recognizes two distinct defaults—under-reporting of income and under-reporting as a consequence of misreporting—each attracting different rates of penalty. It found that the AO failed to clearly identify which default had been committed. While the AO described the case as one of misreporting, he imposed penalty applicable to under-reporting, demonstrating uncertainty regarding the nature of the alleged default. The Tribunal held that this ambiguity itself rendered the penalty unsustainable.
