Koshambh Multitred Pvt. Ltd. Vs DCIT (ITAT Ahmedabad)
No Penalty on Disallowance of Education Cess – Retrospective Amendment Cannot Invite 270A Action: ITAT Ahmedabad
Ahmedabad ITAT , has held that penalty levied u/s 270A(2) t for underreporting of income on account of claim of deduction of education cess is not sustainable, since such claim was bona fide, backed by favourable High Court rulings, & later rendered inadmissible only by virtue of retrospective amendment by Finance Act, 2022.
Assessee had claimed deduction of education cess of ₹15,94,943/- in the return of income. During assessment, AO disallowed the same relying on section 40(a)(ii) as amended by Finance Act, 2022 with retrospective effect from 01.04.2005. Assessee accepted the disallowance. Thereafter, AO levied penalty treating it as misreporting of income u/s 270A(9) & imposed penalty @200% of tax amounting to ₹11,14,674/-.
CIT(A) held that it was a case of underreporting u/s 270A(2) & directed AO to recompute penalty accordingly. CIT(A) further rejected assessee’s plea for immunity u/s 155(18), holding that the prescribed form was notified only from 01.10.2022 & the last date for surrender was 31.03.2023, which assessee had not complied with.
Assessee contended that at the time of filing return for AY 2020-21, there were binding decisions of Hon’ble Bombay High Court in Sesa Goa Ltd. vs. JCIT (2020) 423 ITR 426 & Hon’ble Rajasthan High Court in Chambal Fertilizers & Chemicals Ltd. vs. JCIT ITA No.52/2018 dated 31.07.2018, holding such claim allowable. The claim became inadmissible only due to retrospective amendment by Finance Act, 2022. Assessee fairly surrendered the claim during assessment itself & had no intention to underreport. It was further pleaded that section 155(18) itself grants immunity recognizing the debatable nature of the claim.
