ACIT Vs Glorishine Impex Private Limited (ITAT Mumbai)
No Tax, No Under-Reporting: ITAT Mumbai Deletes 270A Penalty on Mere Re-classification of Loss
The Revenue appealed against the NFAC order deleting a ₹14.09 crore penalty u/s 270A levied on Glorishine Impex Pvt Ltd. Assessee, engaged in commodity trading, had claimed business loss of ₹79.40 crore on settlement of forward contracts with Ruchi Soya & others. AO held that since there was no actual delivery, the loss was speculation loss u/s 43(5) & re-classified it accordingly. Importantly, the quantum of loss was fully accepted, & the assessed income remained NIL, exactly as per the return.
Despite this, AO treated the entire re-characterised loss as “under-reported income” & levied a massive penalty u/s 270A. The NFAC deleted the penalty, holding that there was full disclosure, & the only dispute was on the character of the loss, not on concealment, suppression, or inflation.
Tribunal upheld the NFAC’s decision, holding that:
- Section 270A requires actual under-reporting, not mere change of head or character of an admitted loss.
- Assessee’s tax liability remained NIL—no income was brought to tax.
- Assessee had disclosed all primary facts, & the AO merely adopted a different legal view on the nature of loss.
- Even if clause (g) of s.270A(2) is invoked, the case is protected by s.270A(6) because assessee’s explanation was bona fide with full disclosure.
- Penalty cannot be triggered by a “semantic shift” or a computational re-classification without showing falsity or misreporting.
Tribunal noted that Penalty cannot be the consequence of a mere semantic shift or of a purely classificatory exercise at the hands of the Assessing Officer. Where the assessee has laid all cards on the table & the Revenue has merely rearranged them under a different label without establishing any falsity or suppression, the rigorous & quantified penalty envisaged by section 270A has no application.
