Wellknown Polysters Limited Vs DCIT (ITAT Mumbai)
The assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT), Mumbai, against the order of the National Faceless Appeal Centre (NFAC) for Assessment Year 2020-21, which confirmed a penalty of Rs. 68,12,391 under Section 270A of the Income-tax Act for alleged under-reporting of income arising from the disallowance of deduction claimed towards education cess.
The assessee, a company, filed its return of income on 15.02.2021 declaring a total income of Rs. 2,37,16,74,630. Following scrutiny assessment under Section 143(3), completed on 24.10.2022, the Assessing Officer determined the total income at Rs. 2,40,35,49,937 after disallowing the deduction of education cess amounting to Rs. 3,18,75,307. Thereafter, separate penalty proceedings under Section 270A were initiated for under-reporting of income.
In response to the penalty notice, the assessee submitted that the disallowance resulted solely from the retrospective amendment introduced by the Finance Act, 2022. It contended that the deduction for education cess had been claimed before the amendment and was supported by judicial precedents prevailing at the relevant time. The assessee relied on the decision of the Bombay High Court in Sesa Goa Ltd. v. JCIT, wherein it had been held that such a claim could not be regarded as furnishing inaccurate particulars of income or concealment of income.
