Ravindra Madhukar Kharche Vs ACIT (ITAT Nagpur)
In the case of Ravindra Madhukar Kharche vs. ACIT (ITAT Nagpur), the appeal challenges a penalty imposed by the National Faceless Appeal Centre (NFAC) for misreporting income under section 270A of the Income-tax Act, 1961. The appellant, a retired employee of Maharashtra State Electricity Generation Company Ltd. (MSEGCL), had filed an original return of income declaring a total income of ₹44,68,490, claiming a tax refund due to an upward revision of the gratuity exemption from ₹10 Lakhs to ₹20 Lakhs. The Assessing Officer (AO) disallowed the higher claim of gratuity exemption, restricting it to ₹10 Lakhs and also added an amount of ₹21,550 related to interest income discrepancies, which were acknowledged by the appellant without contest.
Following these disallowances, the AO initiated penalty proceedings, resulting in a penalty of ₹6,02,858 imposed at an accelerated rate of 200%. The appellant contended that the penalty was unjustified, arguing that the claim for the enhanced gratuity exemption was based on a genuine misunderstanding of the law. The ITAT, upon review, noted that the appellant had worked part of his career as a government employee and the remainder as a PSU employee, with a bona fide belief in his entitlement to the higher exemption limit due to a CBDT notification issued in 2019. The Tribunal emphasized that the difference in reported interest income was due to a delay in reporting by the bank, thus not constituting under-reporting of income.
