Gollahalli Sreeramaiah Manjunath Vs DCIT (ITAT Bangalore)
The ITAT Bangalore considered an appeal against the order of the National Faceless Appeal Centre (NFAC) confirming a penalty of ₹11,02,098 levied under Section 270A of the Income-tax Act, 1961 for Assessment Year 2022-23. The assessee challenged the penalty on the ground that neither the assessment order nor the penalty proceedings specified the relevant limb of misreporting under Section 270A(9).
The assessee, engaged in the wholesale trade of rice, dals, pulses and similar commodities, had claimed loading and unloading charges of ₹42,85,636. During scrutiny, the Assessing Officer disallowed 80% of payments aggregating to ₹18,06,394 made to two persons on an ad hoc basis, amounting to ₹14,45,115, citing lack of corroborative documents regarding the recipients. The Assessing Officer also disallowed ₹1,60,509 under Section 40(a)(ia), being 30% of transportation charges of ₹5,35,031, for alleged non-deduction of tax at source. The total addition of ₹16,05,624 was not challenged in the quantum proceedings, and penalty proceedings under Section 270A(9) for alleged misreporting of income were initiated.
Before the Tribunal, the assessee contended that the ad hoc disallowance under Section 37(1) lacked any finding that the expenditure was non-business in nature and that the disallowance under Section 40(a)(ia) for non-deduction of tax on transportation charges did not constitute under-reporting through misreporting. It was further submitted that penalty under Section 270A is not automatic and requires identification of the applicable clause under Section 270A(9).
