Renil E K Kumar Vs DCIT (ITAT Bangalore)
The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) allowed the appeal filed by the assessee against the order of the CIT(A)/NFAC confirming a penalty of Rs. 51,20,500 levied under Section 270A of the Income-tax Act for Assessment Year 2022-23. The Tribunal held that the penalty proceedings were unsustainable both on account of procedural defects and because the assessee had offered a bona fide explanation supported by material facts.
The assessee, an employee of Wipro Limited, had filed his return of income declaring total income of Rs. 84,27,981 after claiming exemption of Rs. 82,05,931 under Section 10(10CC) in respect of ESOP-related non-monetary perquisites. During assessment proceedings, the exemption claim was denied, and the amount was added back to the assessee’s income. Consequently, the assessed income was determined at Rs. 1,66,33,912, and penalty proceedings under Section 270A were initiated.
The assessee explained that the exemption claim had been made on the basis of Form 16 issued by the employer, which reflected the amount as exempt under Section 10 and on which no tax had been deducted at source. The assessee submitted that, due to limited knowledge of taxation matters, he had relied upon the employer-issued Form 16 in good faith and under a bona fide belief that the tax treatment adopted by the employer was correct. He also pointed out that, after the assessment order was passed, he repaid the refund amount received and did not challenge the assessment order.
