Penalty Upheld for Mis-reporting of Income Due to Unjustified Deductions.

Penalty Upheld for Mis-reporting of Income Due to Unjustified Excess Chapter VI-A Deductions.

Brief Facts

The case involves two appeals by the assessee, Mahesh Tukaram Matkar, for Assessment Years (AY) 2017-18 and 2018-19, challenging the confirmation of penalty levied under Section 270A of the Income Tax Act, 1961. For AY 2017-18, the assessee, an employee in Bosch Company Limited, initially filed a return showing a total income of $Rs.4,52,020/-$ after claiming Chapter VI-A deductions of $Rs.2,35,000/-$.

The case was reopened under Section 147 of the Act. In response to the Section 148 notice, the assessee filed a revised return, admitting a higher total income of $Rs.8,47,620/-$ and reducing the Chapter VI-A deductions to $Rs.1,60,000/-$. This difference between the original and revised return amounted to $Rs.3,20,596/-$, which the Assessing Officer (AO) determined was a mis-reporting of income due to an excess deduction claimed.

The AO initiated penalty proceedings under Section 270A for mis-reporting of income and levied a penalty of $Rs.1,32,086/-$ (being 200% of the tax on the under-reported income). The AO rejected the assessee’s explanation, noting that had the department not detected the under-reporting, the assessee might not have submitted the revised income. The Commissioner of Income Tax (Appeals)/NFAC upheld the AO’s penalty order for both assessment years.