The Income Tax Appellate Tribunal reduced a 200% tax penalty to 50% for an NRI who failed to report interest income due to an accountant's error.
Reader brief
Through the Reader lens: A 57-year-old non-resident Indian woman under-reported interest income of Rs 14.02 lakh in her tax return, leading the Income Tax Department to impose a 200% penalty for misreporting. The taxpayer argued the omission was an accountant's error and that she was unaware of department notices due to her residency abroad. The Income Tax Appellate Tribunal in Mumbai ruled that the omission did not constitute deliberate misreporting and reduced the penalty rate to 50%.
What to watch next
- Whether the taxpayer will face further legal challenges regarding the remaining 50% penalty
- Future rulings on distinguishing between under-reporting and misreporting in tax cases
What was said1
Attributed, verbatim. Every quote is checked against the article it came from. One that does not match is not shown.
Anuj Dave
1 quote“She was a non-resident living abroad, had entrusted her compliance to an accountant, claimed limited technological knowledge and to have been unaware of the electronic notices, and paid tax and interest of Rs 5,49,410 on becoming aware of the liability.”
In the article
…but directed the Assessing Officer to apply the 50% rate instead of 200%. Anuj Dave, Practice Head (Ahmedabad & Mumbai) at Clavius Legal told ET that several circumstances taken together supported the taxpayer's case. “ She was a non-resident living abroad, had entrusted her compliance to an accountant, claimed limited technological knowledge and to have been unaware of the electronic notices, and paid tax and interest of Rs 5,49,410 on becoming aware of the liability. ” It is important to note that the Rs 5,49,410 already paid towards tax and interest does not cancel the separate penalty liability. The payment of tax and interest was considered in the taxpayer's favour, but did not…
Sources1
- [1]The Times of IndianeutralShe declared Rs 43,796, misses Rs 14.02L; hit with 200% penalty, but ITAT gave relief