The penalty has been reduced to 50% of the tax payable
Mumbai: The Mumbai bench of the income tax appellate tribunal (ITAT) has reduced a penalty imposed on a 57-year-old non-resident woman from 200% to 50% of the tax payable on under-reported income. It held that every instance of income omission cannot automatically be treated as ‘misreporting’, which entails the higher penalty under Section 270A of I-T Act.
Tax Tribunal Upholds Penalty for Underreported Income
The Income Tax (I-T) officer imposed a penalty of Rs 4.8 lakh, which is 200% of the tax owed on the under-reported income. This decision was based on findings from third-party information that revealed omitted interest. The taxpayer did not respond to multiple notices during the reassessment process.
The appellate commissioner supported the penalty, emphasizing that appointing an accountant or being a non-resident does not exempt a taxpayer from their obligations. However, these factors may influence whether the omission is seen as deliberate misreporting. The tribunal also noted that while the taxpayer’s subsequent payment of the owed tax and interest was relevant, it did not negate the initial default.