Ghanta Srinivas Vs DCIT (ITAT Visakhapatnam)
Summary: The assessee, a practising doctor in Guntur, had originally declared total income of Rs.48,97,990/- for A.Y. 2022-23. A search and seizure action under section 132 resulted in cash of Rs.5,24,18,100/- being found and seized, which the assessee explained as professional receipts attributable to A.Ys. 2022-23 and 2023-24; for A.Y. 2022-23, since the time limit for filing a revised return had expired, he filed a revised statement of total income admitting Rs.3,03,74,646/- towards the cash and paid taxes, and the Assessing Officer completed the assessment by accepting the revised computation without making any addition. The Assessing Officer nevertheless levied penalty under section 270A(9) for under-reporting in consequence of misreporting and also penalty under section 271AAD for omission of entries in the books. The Visakhapatnam ITAT held that the section 274 read with section 270A show-cause notice was vague because the Assessing Officer had not specified the particular sub-clause of section 270A(9) under which the penalty was proposed, and therefore the penalty under section 270A(9) could not be upheld. The Tribunal further held that the assessment was invalid because, for the assessment year involved, following the search the Assessing Officer had proceeded under section 143(3) without following the procedure under section 148, and that the assessee could challenge the validity of the assessment in collateral penalty proceedings; consequently, penalty proceedings founded on the invalid assessment could not be sustained. On merits, the Tribunal held that the Assessing Officer, having accepted the additional income disclosed by the assessee without making any further addition, erred in treating the disclosure as under-reporting in consequence of misreporting, and considered the decision in MAK Data (P.) Ltd. v. CIT in the context supplied by the order. In relation to section 271AAD, the Tribunal considered the provision and the Memorandum explaining the Finance Bill, 2020 and held that the penalty could not be sustained in the present facts merely because professional receipts had not been recorded in the books, having regard to the purpose for which section 271AAD was introduced. The Tribunal accordingly directed deletion of the penalties under sections 270A(9) and 271AAD and allowed the assessee’s appeals in ITA Nos.172/VIZ/2026 and 173/VIZ/2026.
