Sonal Jain Vs ITO (ITAT Agra)
The ITAT Agra allowed the assessee’s appeal and deleted the penalty imposed under Section 270A of the Income-tax Act for Assessment Year 2017-18. The case arose from a difference between turnover reported in the VAT return and the audit report, which the assessee attributed to an incorrect audit report filed by the professional. The Assessing Officer estimated income at 8% of the short-declared turnover, accepted the revised turnover, and imposed a penalty at 200% of the tax payable for alleged misreporting of income. The Tribunal held that Section 270A distinguishes between under-reporting and misreporting, requiring the Assessing Officer to identify the specific default before levying penalty. It found that the addition was based purely on estimation without rejection of the books of account and that the penalty order did not specify which circumstance of misreporting under Section 270A(9) was applicable. Accordingly, the Tribunal held the penalty unsustainable and directed its deletion.
The Tribunal examined whether penalty under section 270A could be sustained where the underlying addition arose from an estimated profit rate applied to turnover differences and where the Assessing Officer had failed to clearly specify whether the penalty was for “under-reporting” of income or “misreporting” of income.
