Narrotam Morarjee Institute of Shipping Vs National Faceless Assessment Appeal Centre (NFAC) (ITAT Mumbai)
Penalty u/s 270A Deleted – Bona-Fide Claim by Charitable Trust Not Misreporting – 200% Penalty Unsustainable – ITAT Mumbai
AO levied penalty u/s 270A @200% alleging misreporting of income on (i) claim of 15% exemption u/s 11(1)(a) on unutilized accumulation taxed u/s 11(3), and (ii) depreciation/capital expenditure issues. CIT(A) upheld penalty.
ITAT held that assessee had duly disclosed unutilized accumulation in ROI and claim was made under bona-fide belief relying on judicial precedent; hence case falls under Sec 270A(6) and cannot be treated as misreporting u/s 270A(9). Tribunal observed that AO changed basis from “under-reporting” to “misreporting” during penalty proceedings without justification and even included capital expenditure in penalty computation despite no disallowance in assessment. Since all material facts were disclosed and issue was debatable, penalty of ₹13.32 lakh was deleted. Assessee appeal allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal filed by the assessee is against the order of Commissioner of Income Tax (Appeal), National Faceless Appeal Centre (NFAC), Delhi vide order no. ITBA/NFAC/S/250/2025-26/1078465227(1) dated 14.07.2025 passed against the penalty order u/s. 270A of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), for AY 2018-19.
