Pranav Vikas India Pvt Ltd Vs DCIT (ITAT Delhi)
In the case of Pranav Vikas India Pvt Ltd Vs DCIT (ITAT Delhi), the tribunal addressed the issue of penalty under section 270A(9) of the Income Tax Act for misreporting income. The appeal was filed against a penalty imposed by the Assessing Officer (AO) for claiming excessive deductions under section 35(2AB). The AO had initially levied a penalty of Rs. 1,09,39,526, which was later reduced to 100% of the tax payable by the CIT(A)/NFAC. The tribunal found that the penalty was unjustified as the misreporting was not driven by malafide intentions but was a result of an inadvertent error, exacerbated by a delay in receiving necessary approvals from the DSIR. The ITAT Delhi noted that the taxpayer had acted on the basis of available documentation and revised claims upon discovering discrepancies. Consequently, the tribunal directed that the penalty be deleted, emphasizing that penalties should not be imposed if there is no evidence of deliberate misreporting.
FULL TEXT OF THE ORDER OF ITAT DELHI
The Assessee has filed this Appeal against the Order of the Ld. CIT(A)/ National Faceless Appeal Centre (NFAC), Delhi dated 26.02.2024 relating to assessment year 2018-19 on the following grounds:-
1. That on the facts and in the circumstances of the case and in law the authorities below palpably erred in levying penalty u/s. 270A(9) of the I.T. Act, 1961 on variegated pleas which order being contrary to facts and repugnant to law.
2. That on the facts and in the circumstances of the case and in law the Ld. CIT(A) at NFAC, Delhi erred on facts and in law in not deleting the penalty imposed by the AO u/s. 270(9) of the Act on the allegation of mis-reporting of income and in directing the AO to impose penalty at 100% of the tax payable on alleged excess claim of ineligible expenditure u/s. 35(2AB) of the Act.
The above actions being arbitrary, fallacious, unwarranted and illegal must be quashed with directions for appropriate relief.
2. Briefly stated facts, are that assessee filed its return of income for the assessment year 2018-19 on 11.10.2018 declaring an income of Rs. 1,78,00,877/- from house property. The assessee had claimed the business loss of Rs. 3,28,29,990/-. After set-off loss, the assessee had admitted total loss of Rs. 2,50,29,113/-. The assessee’s case was selected for scrutiny under CASS. The Assessing Officer (AO) issued notice u/s. 143(2) of the Act and completed the assessment by disallowing difference of Rs. 1,73,57,717/- on account of expenditure claimed u/s. 35(2AB) amounting to Rs. 19,73,52,248/-, whereas the expenditure allowed by the DSIR vide Form 3CL amounting to Rs. 17,99,94,531/-. The AO assessed the total loss at Rs. 1,92,43,204/- and book profit u/s. 115JB at Rs. 14,07,69,338/-. Subsequently, the AO initiated penalty proceedings u/s. 270A of the Act for misreporting of income. The assessee during the course of penalty proceedings filed his reply and also relied on various case laws. The AO was not satisfied with explanation offered by the assessee and imposed penalty of Rs. 1,09,39,526/- u/s. 270A(9) of the Act being 200% of tax payable for misreporting of income. Against the aforesaid action of the AO, assessee preferred appeal before the Ld. CIT(A). Ld. CIT(A)/NFAC, Delhi vide his order dated 26.02.2024 has restricted the penalty to 100% by partly allowing the appeal of the assessee.
