Kishor Kumar Garg Vs ACIT (ITAT Agra)
ITAT Agra Deletes Section 270A Penalty on Ad-hoc Disallowance Without Rejection of Books
The Agra Bench of the ITAT allowed the assessee’s appeal and deleted the penalty levied under section 270A in respect of an ad-hoc disallowance of 10% made on repairs to machinery and compensation paid to employees for AY 2017-18. The Assessing Officer had imposed penalty alleging under-reporting and mis-reporting of income pursuant to a disallowance of ₹1.29 lakh, arising from estimated disallowances without rejecting the books of account.
The Tribunal noted that in the quantum assessment, the AO had not rejected the books of account under section 145(3) and the additions were made purely on an ad-hoc/estimated basis. It held that where additions themselves are based on estimation without pointing out defects in books, penalty under section 270A cannot be sustained, as there is neither under-reporting nor mis-reporting of income in law.
Accordingly, the ITAT held that levy of penalty was unwarranted and directed its deletion. The appeal was allowed on merits, notwithstanding the assessee’s non-appearance, based on material available on record.
FULL TEXT OF THE ORDER OF ITAT AGRA
1. The appeal in ITA No. 363/AGR/2025 for AY 2017-18, arises out of the order of the National Faceless Appeal Centre, Delhi [hereinafter referred to as ‘ld. NFAC’, in short] dated 02.05.2025 against the order of assessment passed u/s 270A of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 21.01.2022 by the Assessing Officer, ACIT, Circle-3(1), Gwalior (hereinafter referred to as ‘ld. AO’).
