Jubilant Securities Pvt. Ltd. Vs DCIT (ITAT Delhi)
The assessee appealed against the order dated 26.08.2022 passed by the National Faceless Appeal Centre (NFAC), Delhi, which confirmed the penalty of Rs. 77,020 imposed under Section 270A of the Income-tax Act, 1961 for the Assessment Year 2017-18.
The assessee, a resident corporate entity, filed its original return of income on 31.10.2017 declaring income of Rs. 20,05,980 and subsequently filed a revised return on 28.08.2018 declaring income of Rs. 18,11,980.
During the assessment proceedings, the Assessing Officer observed that the assessee had earned exempt income during the relevant year and had made a disallowance of Rs. 27,250 under Section 14A of the Act. Taking the view that the disallowance was made on an ad hoc basis and not in accordance with Rule 8D(2), the Assessing Officer recomputed the disallowance under the Rule at Rs. 5,25,762. After adjusting the assessee’s suo motu disallowance, a net disallowance of Rs. 4,98,512 was made. Although the assessee accepted the disallowance and did not pursue litigation on the quantum addition, the Assessing Officer initiated penalty proceedings under Section 270A, alleging under-reporting of income, and imposed a penalty of Rs. 77,020. The first appellate authority confirmed the penalty.
