DCIT Vs S.S. Natural Resources Pvt. Ltd. (ITAT Kolkata)
The Income Tax Appellate Tribunal (ITAT), Kolkata, dismissed the Revenue’s appeal and upheld the order of the Commissioner of Income-tax (Appeals) deleting the penalty of ₹5,17,80,820 levied under Section 270A of the Income-tax Act for Assessment Year 2022-23.
At the outset, the Tribunal condoned a delay of 163 days in filing the Revenue’s appeal after considering the explanation that the delay resulted from obtaining administrative approval from the competent authorities. The assessee did not oppose the condonation, and the appeal was admitted for hearing.
The assessee, a private limited company engaged in exploration and mining of coal and related minerals, had participated in the insolvency resolution process for acquiring M/s Ramsarup Industries Limited. The resolution plan was approved by the National Company Law Tribunal on 4 September 2019, but litigation by the erstwhile promoters delayed the acquisition until the matter was decided in the assessee’s favour by the Supreme Court. During this period, the assessee borrowed funds from group concerns to meet obligations under the resolution plan and claimed interest expenditure of ₹7,75,53,350 as business expenditure in its return for AY 2022-23, which declared a business loss of ₹7,74,32,299. During scrutiny assessment, the Assessing Officer disallowed the interest expenditure, assessed the income at ₹1,21,053, initiated penalty proceedings under Section 270A(9), and ultimately levied a penalty at 200% of the tax payable on the disallowance after concluding that the assessee had misrepresented or suppressed facts.
