GM Modular Pvt. Ltd Vs PCIT (Bombay High Court)
In GM Modular Pvt. Ltd Vs PCIT, the petitioner sought quashing of the order dated 20 March 2025 passed under Section 264 of the Income Tax Act, 1961, and the penalty order dated 29 January 2024 levied under Section 270A. The core issue was whether penalty for under-reporting of income could be imposed when the deduction claimed in the return was based on the then-prevailing judgment of the Bombay High Court in CIT v. Ghatge Patil Transports Ltd. Subsequently, that decision was overruled by the Supreme Court in Checkmate Services Pvt. Ltd.
The petitioner contended that on the date of filing the return, the deduction was legally permissible, and therefore there was no under-reporting of income. It relied on Section 270A(6), which excludes cases where a bona fide explanation is offered and all material facts are disclosed. The petitioner also challenged the revisional order under Section 264 as non-speaking and passed without considering Sections 270A(2) and 270A(6).
The Court observed prima facie that the explanation appeared bona fide since the claim was supported by the law prevailing at the time of filing the return. It further noted that under Section 270A(2), under-reporting arises only if assessed income under Section 143(3) exceeds income processed under Section 143(1)(a), which prima facie did not appear to be the case.
