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2026 Supreme(Online)(ITAT) 9372
INCOME TAX APPELLATE TRIBUNAL (PUNE BENCH)
Manish Borad, Accountant Member
Shirish Murlidhar Kulkarni – Appellant
Versus
Income Tax Officer – Respondent
ITA Nos.2427 to 2429/PUN/2025
For the Appellants/Petitioners: CA Abhilasha Pawar
For the Respondents: Shri Ambarnath Khule
Penalty for underreporting or concealment of income cannot be sustained if the Assessing Officer fails to specify the exact statutory limb or clause under which the penalty is imposed and where the assessee has voluntarily rectified the error and deposited the excess refund with interest.
Headnote:(A) Income-tax Act, 1961 - Sections 148, 270A, 271(1)(c) - Levy of penalty - Suppression of facts - Assessee claimed excess deductions in returns leading to refund, subsequently identified errors due to consultant's misinformation, and voluntarily deposited excess refund with interest prior to issuance of notice u/s 148 - Tribunal observed that penalty for underreporting is unsustainable where the Assessing Officer fails to specify the exact limb/clause of the statute - Following precedents where penalties were deleted under identical circumstances due to lack of specificity and assessee's bonafide conduct - Penalties deleted. (Paras 3, 5, 7)
Facts of the case:
The assessee, an employee, claimed excess deductions under Chapter VI-A in original returns due to incorrect guidance/fraud committed by a tax consultant. Upon discovering the error, the assessee voluntarily returned the excess refund with interest to the Government Treasury. Subsequently, the Assessing Officer issued notices u/s 148 and initiated penalty proceedings u/s 271(1)(c) and 270A.
Findings of Court:
The court found that the Assessing Officer failed to clearly specify the particular limb or clause of the statute under which penalties were being imposed. Relying on judicial precedents established in identical cases, the court concluded that the penalties were not sustainable, especially given the assessee's voluntary disclosure and deposit of excess refunds.
Issues: Whether penalties under section 271(1)(c) and 270A were justified when the assessee had already voluntarily corrected the income and deposited the excess refund before the issuance of notice u/s 148.
Ratio Decidendi: Penalty proceedings are unsustainable where the assessing authority fails to specify the exact statutory limb or clause (a to f of section 270A(9)) under which the penalty is initiated, and where the assessee has demonstrated good faith by voluntarily rectifying the error and depositing the excess refund with interest.
Result: Appeals allowed.
| Table of Content |
|---|
| 1. introduction of appeals regarding penalty for assessment years 2016-17 to 2018-19. (Para 1 , 2) |
| 2. penalty cannot be levied when the assessee corrects claims voluntarily before notice upon realizing consultant fraud. (Para 3 , 4 , 5) |
| 3. consistent application of judicial precedents regarding penalty deletions in identical factual scenarios. (Para 6 , 7) |
आदेश / ORDER
The captioned appeals at the instance of assessee pertaining to the Assessment Years 2016-17, 2017-18 & 2018-19 are directed against the separate orders dated 30.09.2025 of National Faceless Appeal Centre, Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of the respective Penalty Orders passed u/s.271(1)(c)/270A of the Act.
2. The common grievance in these three appeals is against the levy of penalty at Rs.72,031/- u/s.271(1)(c) of the Act for A.Y. 2016-17; Rs.1,40,972/- u/s.270A of the Act for A.Y. 2017-18 and Rs.1,53,016/- u/s.270A of the Act for A.Y. 2018-19.
3. At the outset, ld. Counsel for the assessee placing reliance on the decision of Coordinate Bench in the case of Santosh Ashokrao Barhanpurkar Vs. ITO - ITA Nos. 2131 to 2132/PUN/2024 order dated 18.02.2025 submitted that the same is squarely applicable on the facts of the instant case so much so that the assessee made excess claim of deductions in the income tax returns resulting into refund but thereafter assessee on coming to the knowledge about the wrong claim allegedly made on the wrong guidance of the Tax Consultant, refunded back the excess refund received by him along with interest payable thereon. Subsequent to the deposit of excess refund with the Government Treasury, notice u/s.148 of the Act has been issued and in compliance thereof the assessee has furnished the return of income making correct claim of deduction u/s.80C of the Act and therefore in light of the above decision assessee should not be considered as assessee in default for furnishing ‘inaccurate particulars of income or ‘concealment of income’ or ‘underreporting of income’ as provided u/s.271(1)(c)/270A of the Act respectively.
4. On the other hand, ld.DR supported the orders of ld.CIT(A).
5. I have heard the rival contentions and perused the record placed before me. The common issue relates to levy of penalty u/s.271(1)(c) of the Act. Admittedly, the assessee is employed with BOSCH Ltd. and has claimed excess deductions under the provisions of Income-tax Act in the original return thereto claiming excess refund. Thereafter, assessee had come to the knowledge about the wrong claim and suo motu deposited the excess refund along with interest to the Government Treasury. Thereafter, the assessment year in question has been reopened by the Assessing Officer by issuing notice u/s.148 of the Act and assessee has filed the return in compliance thereof and has disclosed the correct income. However, ld. Assessing Officer even though accepted the returned income has initiated the penalty proceedings for excess claim of deductions made in the original return of income and subsequently levied penalty u/s.271(1)(c) for A.Y. 2016-17/270A of the Act for the A.Yrs. 2017-18 and 2018-19. I note that under similar set of facts and circumstance this Tribunal in the case has dealt with the issue and has deleted the impugned penalty observing as follows :
“9. We have heard Ld. DR & perused the material available on record. From the statement of facts, we find that the assessee is a salaried employee of BOSCH Limited & belongs to technical background. The return of most of the employees of Bosch Company, including that of the assessee was filed by a tax consultant namely Kishor Patil. We further find that the assessee came to know from other employees in company that Mr. Kishor Patil with his expertise is able to legally calculate lower tax, resulting in refund of TDS deducted by employer. The assessee was unaware about the contents of the Income Tax Return filed by Kishor Patil & truly b
