Apex Detonators Pvt. Ltd Vs DCIT (ITAT Nagpur)
The ITAT Nagpur upheld the penalty levied under Section 270A of the Income Tax Act for under-reporting of income where the assessee company failed to file its return of income for AY 2019-20 and also ignored notices issued under Section 148. The addition pertained to interest income of ₹8,62,624 earned on fixed deposits, which came to the Department’s notice through Form 26AS. The assessee argued that tax had already been deducted at source and the omission to file the return was unintentional, arising from the company’s dormant status and management changes. However, the Tribunal held that filing a return is a statutory obligation and that the explanation offered lacked bona fides, particularly as it was raised belatedly. Since the income was assessed only on the basis of third-party information and would otherwise have escaped taxation, the case constituted under-reporting under Section 270A, justifying the penalty.
Core Issue. The principal issue before the Tribunal was whether penalty levied under Section 270A of the Income-tax Act, 1961 for under-reporting of income could be sustained where the assessee-company had failed to file its return of income and the income ultimately assessed consisted solely of interest income already reflected in Form 26AS and subjected to tax deduction at source (TDS). The assessee contended that since the income was fully available with the Department through TDS records, there was neither concealment nor misreporting warranting penalty.
