Case Law Details
S. Saroja Vs DCIT (ITAT Chennai)
The appeal in question, made by S. Saroja, challenges the order passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, pertaining to the assessment year 2017-18. Central to the appeal was the penalty imposed by the Assessing Officer (AO) under section 270A of the Income Tax Act, 1961, due to an inadvertent error by the assessee’s accountant in the reporting of the annual value of house property.
The appellant, a senior citizen, had entrusted an accountant to file her return of income. The accountant inadvertently reported the annual value of the house property at Rs. 5,40,000 instead of Rs. 8,40,000. This error was pointed out during the assessment proceedings, and the appellant acknowledged and rectified the mistake, accepting the correct annual value of the house property and paying the corresponding taxes.
However, the AO levied a penalty under section 270A of the Act for the under-reporting of income due to this error, a decision upheld by the CIT(A). The appellant argued that the error was not intentional and did not constitute misreporting warranting a penalty.
The ITAT, upon considering the facts of the case and the submissions by both parties, concluded that the accountant’s inadvertent error could not be considered as under-reporting of income for levying penalty under section 270A. Additionally, the appellant’s decision to classify interest income under ‘income from business’ based on a bonafide belief was seen as a reasonable mistake, especially considering that there was no tax difference when offered under ‘income from other sources’ and ‘income from business’.
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