MSC Agency (India) Private Limited Vs ACIT (ITAT Mumbai)
Assessee is Private Company and had filed its return at Rs.3,30,07,37,660/-. AO completed assessment u/s. 143(3) at total income at Rs.3,33,40,09,098/- after making an addition/disallowance on account of education cess amounting to Rs. 3,32,71,436/- claimed by the assessee in its revised return. Penalty proceedings u/s 270 A were also initiated. Before CIT (A) assessee withdrew ground related to education cess. CIT (A) adjudicated ground related to initiation of penalty which was affirmed.
Before ITAT it was submitted by assessee that it was not a case of ‘under reporting of income’ or ‘misreporting of income’, for the reason that the claim of deduction for educational cess u/s. 37(1) was covered by the decision of the Hon’ble High Court of Rajasthan in the case of Chambal Fertilizers and Chemicals Ltd. vs. JCIT and other decisions of c0-ordinate bench. Claim of the assessee for deduction for education cess was on a bonafide belief that it was allowable expenditure u/s. 37(1) and hence, the same was not a case for initiation of penalty proceedings u/s. 270A. AO has not levied penalty but the CIT(A) has upheld the initiation of penalty hence CIT(A) has gone beyond his jurisdiction by giving a finding for initiation of penalty and stated that the same cannot be sustained. On the other hand, revenue relied upon the judgment of CIT (A).
