Case Law Details
Veereshayya Angadi Vs ITO (ITAT Bangalore)
Introduction: The Income Tax Appellate Tribunal (ITAT) in Bangalore recently addressed the issue of penalization of an assessee for an excessive refund claim on the return of income, influenced by a tax consultant. In the case of Veereshayya Angadi Vs ITO, the court examined the complex nuances of penalty under section 270A of the Income Tax Act, redefining the responsibility of the assessee and the tax consultant.
Analysis: This landmark case revolves around the concept of ‘bonafide belief’ of the assessee, who filed a revised return of income based on the advice of a tax consultant. The tribunal, through a series of additional grounds, scrutinized the role of the tax consultant, the validity of the revised return of income, the presence of mens rea by the appellant, and the overall execution of the penalty proceedings.
The ITAT ruled that the additional grounds raised by the assessee, which were not considered by the National Faceless Appeal Centre (NFAC), must be examined. It relied on a similar case – Shri Ravikiran Netla in ITA No.2123/Bang/2018, where the tribunal held that if the fraudulent act was found to be solely perpetrated by the tax consultant and the assessee’s act was bonafide, no penalty can be levied.
Conclusion: The ITAT Bangalore’s ruling brings a new perspective to the imposition of penalties under section 270A of the Income Tax Act. This verdict stands as a precedent, emphasizing that if an assessee’s act is found to be bonafide, they shall not be penalized for the actions of a tax consultant. Thus, this ruling significantly shifts the lens towards the responsibilities of tax consultants in influencing the tax decisions of the assessees.
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