Intervalve Poonawalla Pvt. Ltd Vs DCIT (ITAT Pune)
Income Tax Appellate Tribunal (ITAT), Pune Bench, has set aside a penalty of Rs. 3,59,646 levied under Section 271(1)(c) of the Income Tax Act, 1961, against Intervalve Poonawalla Pvt. Ltd. The penalty pertained to a disallowance of Rs. 11,08,482 claimed as provision for leave encashment for the assessment year 2014-15. The Tribunal’s decision, pronounced on June 4, 2025, underscored that merely making a claim, even if ultimately unsustainable, does not amount to concealment or furnishing inaccurate particulars if full disclosures are made and a tenable legal position supported the claim at the time.
Background of the Case
Intervalve Poonawalla Pvt. Ltd., a manufacturer of valves, filed its return of income for AY 2014-15, declaring a total income of Rs. 2,28,68,970. During the scrutiny assessment under Section 143(3), the Assessing Officer (AO) determined the total income at Rs. 2,61,81,111, incorporating various additions. One such addition was the disallowance of Rs. 11,08,482 related to provision for leave encashment, based on Section 43B(f) of the Act. The assessee had debited this amount to its Profit and Loss Account, noting in the computation that Section 43B(f) provisions were not applicable to actuarial valuation-based leave encashment provisions.
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