AI Structured Summary
Not yet generated for this judgment
Judgment
PER M. BALAGANESH, A. M.:
The appeal in ITA No.1752/Del/2025 for AY 2019-20, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „ld. NFAC‟, in short] dated 28.01.2025 against the order of assessment passed u/s 270 of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 24.07.2024 by the Assessing Officer, NaFAC, Delhi (hereinafter referred to as „ld. AO‟).
The assessee has raised the following grounds of appeal:-
“1.On the Basis of the facts and circumstances of the case, the Ld. CIT(A) has erred in dismissing the appeal as infructuous, and not adjudicating on merits of the case.
2.On the Basis of the facts and circumstances of the case, the Ld. AO has erred in levying penalty of Rs. 39,894/- u/s 270A of the Act, for non-payment of tax which is already paid.
3.The Ld. AO has erred in assessing the tax liability for AY 2019-20 by not adjusting the amount of TDS of RS. 83,656/- against the tax payable and hence, has come out with the tax payable amount which was actually a refund. On relying of this calculation, the AO has wrongly imposed the penalty of Rs. 39,894 u/s 270A of the Act, @50% of the tax payable, which is a mistake apparent from record. The appellant is aggrieved by this arbitrary Order of AO, Therefore the penalty order of Rs. 39,894 be quashed.
4.The Appellant craves to add, alter, delete, modify or withdraw any of the above grounds of appeal.
5.That the relief prayed for, may kindly be allowed and the orders of the Ld. CIT(A)/Ld. AO may kindly be quashed, set aside, annulled or modified.”
We have heard the rival submissions and perused the material available on record. The assessee for AY 2019-20 had not filed his return of income. The ld AO re-opened the case of the assessee for AY 2019-20 u/s 147 of the Act on the basis of information that assessee had entered into financial transaction of Rs. 1,18,00,000/-. The ld AO observed that the assessee is found to have received interest of Rs. 8,36,440/- on fixed deposits. Since, the assessee failed to file his return of income even in response to notice u/s 148 of the Act, notice u/s 142(1) of the Act stood issued to the assessee on 08.09.2023 to file return of income and other documents required for completion of reassessment proceedings. This notice was not complied by the assessee which prompted the ld AO to complete the re-assessment u/s 144 r.w.s. 147 of the Act on 11.01.2024 determining the total income of Rs. 8,36,440/- being the interest income on FDs. Consequently penalty proceedings u/s 270A of the Act for underreporting of income were initiated which culminated in levy of penalty in the sum of Rs. 39,894/- vide order u/s 270A of the Act dated 24.07.2024.
The assessee was a non-resident till AY 2018-19 and hence, did not file return of income for AY 2019-20. However, the interest on fixed deposits amounting to Rs. 8,36,440/- was duly subjected to deduction of tax at source and no tax was payable by the assessee thereon. The assessee was under bonafide belief that since the entire tax on the interest income has already been paid in the form of TDS, there was no obligation for him to file the return of income. It was submitted that assessee had no intention to hide his income when the entire income is already reflected in Form 26AS of the assessee. Accordingly, it was pleaded that there was no underreporting of income warranting levy of penalty u/s 270A of the Act. It was also submitted that the assessee had indeed submitted the source of fund for making investment in deposits to the tune of Rs. 1,18,00,000/- and same were accepted by the ld AO. The ld CIT(A) without appreciating all these facts merely dismissed the appeal by applying the provisions of Section 249(4) of the Act on the ground that the assessee had not paid the tax due on the return of income either in the form of self assessment tax or in the form of advance tax. In fact the appeal was dismissed as infructuous by the ld CIT(A).
We find that the entire income in the form of interest on FDs had been duly subjected to deduction of tax at source. Hence, tax is paid by the assessee in the form of TDS and there was no balance tax left to be paid by the assessee on the interest income. No doubt the assessee had not filed his return of income for AY 2019-20. But this is sought to be explained by the assessee that he being a non resident till AY 2018-19 was under bonafide belief that since the entire income has been subjected to deduction of tax at source, there was no obligation for him to file his return for AY 2019-20 in India. This belief, in our considered opinion, is a genuine and bonafide belief and not found to be false by the revenue. When the entire income is duly subjected to deduction of tax at source, there cannot be any case of under reporting of income by the assessee warranting levy of penalty u/s 270A of the Act. Reliance in this regard has been rightly placed on the decision of the coordinate bench of Bangalore Tribunal in the case of Sekhon Jagtar Singh Vs. ITO in ITA No. 1104/Bang/2024 dated 21.08.2024 wherein it was held as under:-
“The income of the assessee was subject to TDS and almost entire tax liability was already paid by way of TDS and the same was duly reflecting in the record of the department. Hence there was no reason for the assessee to under-report his income by not furnishing return of income. The assessee due to bona fide belief failed to file the return of income. Therefore, no penalty shall be levied under section 270A of the Act on account of underreporting of income.”
Similar view was also taken by Ahmedabad Tribunal in the case of Parulben Vijay Kumar Patel Vs. ITO in ITA No. 164/Ahd/2024 dated 22.05.2024. There cannot be any contumacious conduct that can be attributed on the assessee in the facts and circumstances of the instant case. Hence, levy of penalty u/s 270A of the Act is hereby directed to be deleted. Accordingly, the grounds raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed.