Jetsynthesys Private Limited Vs DCIT (ITAT Pune)
Assessee company faced a penalty of ₹2.74 lakh u/s 270A(9) for alleged misreporting of income relating to disallowance of delayed employee’s PF & ESIC payments. AO treated the disallowance as “misreporting”, & CIT(A)/NFAC confirmed it, relying on Checkmate Services Pvt. Ltd. v. CIT (SC, 2022).
Before ITAT, Assessee contended that the claim was based on prevailing High Court decisions (including Ghatge Patil Transport Ltd., Bombay HC) which permitted deduction if payment was made before filing the return, & that the issue was debatable until the Supreme Court’s ruling in 2022. Therefore, no element of concealment or misreporting existed.
Tribunal noted that Assessee had disclosed all particulars & the claim was made bona fide in accordance with the law then in force. Relying on CIT v. Reliance Petroproducts (2010) 189 Taxman 322 (SC), it held that mere disallowance of an expenditure does not attract penalty for under-reporting or misreporting.
Held: The issue being debatable, penalty u/s 270A(9) was unjustified; penalty deleted.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal filed by the assessee is directed against the order dated 19.12.2024 passed by Ld. CIT(A)/NFAC for the assessment year 2017-18.
2. The appellant has raised the following grounds of appeal :-
“1. On facts and circumstances prevailing in the case and as per provisions of the Act it be held that the penalty imposed u/s 270A of the Act amounting to Rs. 2,74,100/- is not in accordance with the provisions of the Act. Just and proper relief be granted to the assessee.
2. On facts and circumstances prevailing in the case and as per the provisions of the Act, it be held that the assessing officer and CIT(A) erred in not identifying the Specific clause under Section 270A(9) for categorizing under-reporting as misreporting of income. Thus, order passed is without jurisdiction and bad in law. Just and proper relief be granted to the assessee.
3. The appellant prays to be allowed to add, amend, modify, rectify, delete, and raise any grounds of appeal at the time of hearing.”
3. Facts of the case, in brief, are that the assessee is a Private Limited Company filed its return of income on 22-11-2017 declaring a loss of Rs.(-) 26,35,89,143/-. Vide order dated 17-12-2019, assessment order u/s 143(3) of the Act was passed determining loss at Rs.(-)26,31,45,460/- as against the loss returned by the assessee at Rs.(-)26,35,89,143/-. The above assessed loss includes disallowance of Rs.4,43,505/- on account of delayed payment of Employees’ PF and ESIC. Vide order dated 13.02.2024 Assessing Officer also imposed penalty of Rs.2,74,100/- u/s 270A(9) of the Act for under-reporting of income in consequence of miss-reporting thereof.
