In ITA No. 10 /Bang/2023 -ITAT- Assessee not liable for penalty under Section 270A of the Income Tax Act for actions of their Tax consultant: ITAT (Bangalore)
Members Beena Pillai (Judicial) & Chandra Poojari (Accountant) [19-06-2023]

Read Order: Mr. Veereshayya Angadi v. ITO Ward

Chahat Varma

New Delhi, July 21, 2023: The Bangalore bench of the Income Tax Appellate Tribunal has ruled that if the assessee acted in good faith and relied on professional advice, they should not be held responsible for any wrongdoing committed by their tax consultant.

The issue in the present case involved the filing of revised income tax returns by the assessee for AY 2017-18. Initially, the assessee had filed the original return declaring a total income of Rs. 21,53,790. However, later the assessee filed a revised return declaring a total income of Rs. 9,57,190 based on advice from a tax consultant. The consultant claimed that the original return was incorrect and needed to be revised. The revised return claimed an excessive refund of Rs. 3,65,340. Subsequently, the assessee received a scrutiny notice under Section 143(2) of the Income Tax Act, for the said AY. An order was passed under Section 143(3) of the Act, treating Rs. 12,36,600 as under-reported income and imposing a demand of Rs. 3,82,109. The assessee also received a show cause notice for penalty under Section 270A of the Act. The assessee made submissions requesting the dropping of the penalty proceedings, but the Assessing Officer (AO) passed the penalty order without considering the plea. The assessee appealed to the National Faceless Assessment Centre (NFAC), which confirmed the levy of the penalty under Section 270A of the Act.

The Tribunal noted that the NFAC did not have the opportunity to examine the additional grounds raised by the assessee. Thus, in the interest of justice, the Tribunal remitted the entire issue in dispute, including the excessive refund claim, back to the NFAC for reconsideration. They directed the NFAC to determine whether the assessee was bonafide in claiming the excessive refund and to decide accordingly.

“If there is no fault of the assessee, assessee shall not be penalized for the action of the tax consultant…..In the result, appeal of the assessee is partly allowed for statistical purposes,” held the Tribunal.