Aeropure UV Systems Private Limited Vs DCIT (ITAT Pune)
The Pune ITAT deleted penalty under Section 271(1)(c), holding that a bonafide difference in share valuation methodology cannot be treated as furnishing inaccurate particulars of income.
The assessee had issued shares at a premium based on a valuation report using multiple methods (NAV, DCF, and Fair Value). The Assessing Officer rejected this approach, adopted NAV method, and made an addition under Section 56(2)(vii)(b), which was partly sustained by CIT(A). Subsequently, penalty of ₹4.83 lakh was levied alleging inaccurate particulars.
The Tribunal noted that the assessee had relied on a recognized valuation method supported by a Chartered Accountant’s report, and the dispute was merely about the appropriateness of the method. Relying on judicial precedents including Reliance Petroproducts, it held that making an incorrect or unsustainable claim does not amount to concealment or furnishing inaccurate particulars.
Accordingly, the ITAT set aside the CIT(A)’s order and directed deletion of the penalty.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal filed by the assessee is directed against the order dated 29.08.2025 passed by Ld. CIT(A)/NFAC for the assessment year 2015-16.
2. The appellant has raised the following grounds of appeal :-
“1. The learned CIT(A) erred on facts and in law in levying penalty of Rs.4,83,285/- u/s 271(1)(c) of the Act on account of alleged furnishing of inaccurate particulars of income by the assessee company without appreciating the facts involved, the law and the detailed submissions made by the assessee its proper perspective.
2. The appellant craves leave to add, alter, delete or substitute all or any of the above grounds of appeal.’
3. Facts of the case, in brief, are that the assessee is a private limited company engaged in the business of delivering solutions for air and surface quality, based on ultraviolet germicidal irradiation technology to the India and in International markets. The return of income for year under consideration was filed on 26.09.2015 declaring Nil income. The case was selected for scrutiny under CASS and accordingly statutory notices u/s 143(2) and 142(1) respectively were issued to the assessee. During the course of assessment proceedings, the Assessing Officer found that the assessee company had offered its shares at the value of Rs.30/-per share including premium of Rs.20/- per share. For the purposes of issue of these shares, the assessee company obtained a share value report from an independent Chartered Accountant which forms the basis for determination of fair market value as provided u/s 56 of the IT Act. The valuation of shares was based on the weighted average method consisting of three methods i.e. (a) NAV method, (b) Discounted Cash Flow (DCF) method and (c) Fair Value (FV). However, the Assessing Officer was of the view that the FMV as per NAV method is appropriate and the method adopted by the assessee is not correct. Accordingly, the Assessing Officer added share premium of Rs.52,13,320/- received @ Rs.20/-per share over and above the face value of the share at Rs.10/- per share and added the same to the total income of the assesse u/s 56(2)(vii)(b) of the IT Act. Penalty proceedings u/s 271(1)(c) of the IT Act were also initiated for furnishing of inaccurate particulars of income. The assessee preferred an appeal against the above assessment order wherein Ld. CIT(A)/NFAC partly allowed the appeal and restricted the addition of Rs.52,13,320/- to Rs.15,63,996/- only and deleted the rest of the addition of Rs.36,49,324/-. While partly allowing the appeal of the assessee, Ld. CIT(A)/NFAC held that an option is available to the assessee either to choose NAV method or to choose DCF method and the Assessing Officer cannot adopt a method of his own choice. Subsequently, vide order dated 27.09.2021 penalty of Rs.4,83,275/- u/s 271(1)(c) of the IT Act was levied for furnishing inaccurate particulars of income to the extent of Rs.15,63,996/-.
