Case Law Details
Rajendra Sadashiv Patil Vs ACIT (ITAT Pune)
In this case expenses were disallowed on estimate basis. Penalty has been levied on these disallowance of estimated expenses. Section 270A of the Act provides for imposition of penalty for under-reporting and misreporting of income. Sub-section (2) enlists certain circumstances of under-reporting of income. Sub-section (3) deals with the determination of under-reported income, which, in our context, is by reducing the income returned by the assessee from the amount of income finally assessed. Sub-section (6) is relevant for our purpose which states that under-reported income for the purpose of this section shall not include certain items. Clause (b) of subsection (6) refers to: “the amount of under-reported income determined on the basis of an estimate, if the accounts are correct and complete to the satisfaction of the Assessing Officer ….”. It is ostensible from the language of sub-section (6) that an addition made on the basis of estimation cannot provide foundation for under-reported income for the purpose of imposition of penalty u/s 270A of the Act. In this case, the penalty has been levied on estimated disallowance. Hence, penalty is not sustainable. Accordingly, the AO is directed to delete the penalty levied under section 270A of the Act.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Appeals), Pune-11 dated 10.08.2022 emanating from penalty order dated 20.01.202 1 for the A.Y.2017-18. The Assessee has raised the following grounds of appeal:
“1. On the facts and circumstances of the case and in law the Ld. CIT(A)-11, Pune erred in confirming the levy of penalty under section 270A (9) levied by the ACIT, Central Circle Kolhapur on the disallowance of interest u/s 36( l) (iii) though:
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