Penalty for misreporting of income cannot be imposed in case there is no malafide intention: ITAT Delhi
M/S PRANAV VIKAS INDIA PVT. LTD (ITA NO. 1218/Del/2024)
Facts:
1. The Assessing Officer (AO) imposed a penalty of Rs. 1,09,39,526/- on the assessee for allegedly misreporting income by claiming a higher deduction under Section 35(2AB) of the Income Tax Act than what was approved by the Department of Scientific and Industrial Research (DSIR). The AO imposed a penalty at 200% of the tax payable on the disallowed amount.
2. The assessee appealed the AO’s decision to the Commissioner of Income Tax (Appeals) [CIT(A)] at the National Faceless Appeal Centre (NFAC), Delhi. The CIT(A) acknowledged that there was no deliberate intention of misreporting by the assessee and reduced the penalty from 200% to 100%.
ITAT held as below:
1. The assessee claimed the deduction based on the tax audit report and the DSIR approval, which was received later during the assessment process.
2. The CIT(A) recognized that the assessee did not have a malafide intention in claiming the deduction.
3. The difference in the claimed deduction arose due to a revision by DSIR after the deduction was initially claimed.
4. Given these facts, the penalty, even at the reduced rate of 100%, was not justified. So the penalty be deleted entirely.
5. The appeal by the assessee is allowed, and the penalty is quashed.
Conclusion:
This decision emphasizes the principle that penalties under Section 270A(9) of the Income Tax Act for misreporting of income, should not be imposed if there was no malafide intention or if there was a genuine mistake or oversight.
The copy of the order is as under:
