Capgemini Technology Services India Limited Vs ACIT (ITAT Pune)
No Misreporting, Only Misunderstanding – Education Cess Claim Was Bonafide – Cess Disallowance Cannot Trigger 270A Penalty –Pune Tribunal Gives Penalty a Decent Burial
In this appeal, Capgemini Technology Services India Ltd challenged the penalty of Rs.93,30,373/- levied by AO u/s 270A for alleged under-reporting arising from the claim of deduction of Health & Education Cess. The assessment was completed u/s 143(3) r.w.s. 144B with disallowance of Rs.5.34 crore towards cess. AO imposed penalty treating it as under-reported income in consequence of misreporting. CIT(A)/NFAC confirmed the levy.
Before Tribunal, Assessee submitted that the cess deduction was claimed on a bonafide basis relying on favourable decisions including Sesa Goa (Bombay HC) & Chambal Fertilisers (Rajasthan HC). After retrospective amendment by Finance Act 2022 inserting Explanation 3 to section 40(a)(ii) & section 155(18), the Assessee withdrew the claim during assessment itself & also filed Form 69 on 25-03-2023 within prescribed time. It also reduced MAT credit voluntarily to reflect incremental liability.
Tribunal observed that the claim was debatable & supported by several High Court decisions at the time of filing return, hence bonafide. It held that after withdrawal of claim & filing of Form 69, immunity available u/s 155(18) squarely applied. Tribunal relied on Rajasthan HC in G R Infraprojects Ltd, Delhi ITAT in Global Coal & Mining Pvt Ltd & Bangalore ITAT in IIFL Samasta Finance Ltd, holding that penalty cannot be levied when the claim was made in good faith based on prevailing jurisprudence & withdrawn after retrospective amendment. Since AO failed to specify the exact limb of misreporting u/s 270A(9) & the Assessee had complied with statutory requirements of Form 69, Tribunal held that penalty was unsustainable. Accordingly, penalty u/s 270A was deleted.
