When Mr Sharma from Sikar, near Jaipur, did not file any income tax return, the Income Tax Department sent him a tax notice. In response to this tax notice, Sharma filed an ITR declaring Rs 12.9 lakh income for AY 2018-19. However, the Income Tax Assessing Officer (AO) believed that if he had not sent a tax notice, Sharma’s Rs 12.9 lakh income would have escaped the tax net. So the AO initiated tax penalty proceedings under Section 270A. According to the law, the AO could have levied up to 200% of the tax owed. The tax payable on Rs 12.9 lakh unreported income came to Rs 1.99 lakh. So the AO levied Rs 3.99 lakh penalty on Sharma (200%).
The Commissioner of Appeals (CIT A) confirmed this penalty. Sharma then hired Advocate Shafi Mohammad Chouhan and Advocate Sahil Shafi Chouhan to appeal to the Income Tax Appellate Tribunal (ITAT) in Jaipur.
