DACSS Granites Pvt. Ltd. Vs ITO (ITAT Bangalore)
In a recent decision by the Income Tax Appellate Tribunal (ITAT) Bangalore, DACSS Granites Pvt. Ltd., a Private Limited company engaged in granite business, contested penalties imposed under Section 270A of the Income Tax Act, 1961. The case pertained to the assessment year 2017-18, with the tribunal addressing issues raised in response to a scrutiny assessment conducted under Section 143(3) of the Act.
During assessment, the Assessing Officer (AO) made additions totaling Rs. 49,28,158 under Sections 14A, 36(1)(iii), and 40(a)(ia) of the Act. Despite a negligible tax demand of Rs. 5, DACSS Granites Pvt. Ltd. opted not to contest the AO’s decision and accepted the additions made.
Subsequently, a penalty notice was issued under Section 270A, prompting the assessee to challenge the penalty on grounds of non-tenability. The ITAT proceedings revealed that the AO had levied a penalty of Rs. 7,61,400 for alleged under-reporting of income, a decision upheld by the Commissioner of Income Tax (Appeals) [CIT(A)].
In defense, DACSS Granites Pvt. Ltd. argued before the ITAT that the disallowances made by the AO were unjustified. Specifically, they contested disallowances under Sections 36(1)(iii) and 40(a)(ia), citing reserves amounting to Rs. 17.89 crores and a corrective measure taken regarding TDS deductions as evidence of compliance.
