Bolar Jayaraj Shetty Vs ITO (ITAT Bangalore)
Fraudulent Deduction Claimed by Tax Consultant Without Assessee’s Knowledge-Penalty Cannot Be Levied Without Examining Assessee’s Bona Fides: ITAT Bangalore
Summary: The Bangalore Bench of the Income Tax Appellate Tribunal has held that where false deductions and refund claims were allegedly made by a tax consultant without the assessee’s knowledge, penalty under Section 271(1)(c) could not be sustained without first examining whether the consultant was solely responsible for the fraudulent claims and whether the conduct of the assessee was bona fide.
The Tribunal, however, did not finally delete the penalties. It restored the matter to the Assessing Officer for a fresh factual enquiry.
Facts of the case
The assessee had filed returns of income for Assessment Years 2014-15 to 2016-17. In those returns, certain TDS credits and deductions under Chapter VI-A were claimed. The returns were filed through one Shri Nagesh Shastri, a tax consultant, using the consultant’s email address.
Subsequently, the Income-tax Department conducted a survey at the premises of the tax consultant. During the survey, the consultant allegedly admitted that he had made various bogus or false claims in the returns filed on behalf of his clients. Such claims were made either to reduce their tax liability or to obtain excessive refunds.
