9911796707
TMI Blog2025 (5) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... he following grounds: - "1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the penalty of Rs. 2,49,34,501/- made u/s 270A of the Income Tax Act, 1961 for under reporting of income by overlooking the fact that the issue of deduction u/s 80-IC of the Act is already before the Hon'ble Bombay High Court for A. Ys. 2011-12, 2012-13, 2013-14 & 2014-15 and the issue has not reached to its finality? 2. The appellant craves leave to add, delete, alter, modify, rectify, substitute or otherwise any or all of the grounds of appeal at or before the time of hearing of the appeal." 3. Let us examine the relevant material facts and the developments leading to the present litigation. The assessee is a public limited company engaged in the business of manufacturing and marketing products such as fabric whiteners, soaps, detergents, mosquito repellents, dishwashing liquids, liquid scrubs, and incense sticks. The assessee filed its return of income for the impugned assessment year declaring a gross total income of Rs. 8,81,90,057/-. It claimed deductions under Chapter VI-A of the Act amounting to Rs. 28,11,54,856/-, which were, however, res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly deleted by the ITAT, Mumbai in the following decisions:- S.No. A.Y. I.T.A No. Bench Date of order 1 2011-12 7281/Mum/2016 CO 80/Mum/2018 J 30/11/2018 2 2012-13 7280/Mum/2016 CO 114/Mum/2018 F 18/05/2022 3 2013-14 & 2014-15 3815/Mum/2018 3876/Mum/2018 Cos 149 & 150/Mum/2019 F 28/12/2022 4 2015-16 5774/Mum/2024 F 30/12/2024 In all the years, the assessee succeeded on merit. But only in this impugned assessment years, the assessee has not carried the dispute before the Ld.CIT(A) as the amount was duly adjusted and no tax liability was raised. So considering this fact and factual dispute, the impugned penalty was not to be levied. The Ld.AR further stated that the revenue has carried the issue before the Hon'ble Bombay High Court, but no stay order was issued nor the appeal decided yet. 5. The Ld.AR relied on the order of the co-ordinate bench of ITAT, Mumbai in the case of Shirpur Gold Refinery Ltd vs ACIT, Circle 9(3), in ITA NO.2231/Mum/2011, date of order 31/05/2011. The relevant para 6 is extracted below:- "6. Under these circumstances, and in the light of the above observations of Hon'ble Delhi High Court, by no stretch of imagination, it can be sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome. Without prejudice to the contention that the assessee cannot be considered to have under-reported its income, it is submitted that as per clause (a) of section 270A(6), if the assessee offers a bona fide explanation in respect of any amount of income and discloses all the material facts to substantiate such explanation, then such income shall not be treated as under-reported income. Relevant extract of section 270A(6) is reproduced hereunder "(6) The under-reported income, for the purposes of this section, shall not include the following, namely: - (a) the amount of income in respect of which the assessee offers an explanation and the Assessing Officer or the Commissioner (Appeals) or the Commissioner or the Principal Commissioner, as the case may be, is satisfied that the explanation is bona fide and the assessee has disclosed all the material facts to substantiate the explanation offered" The word "bona fide" is not defined under the Act. However, the Delhi High Court, in the case of CWT v. Santokh Singh: [2001] 252 ITR 707 has referred to the dictionary meaning of the word and observed as under: "Bona fide means something which is done in good faith, genuine, real ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Bombay High Court. The revenue has challenged the order passed by the ITAT; however, the Ld. DR candidly admitted that no stay has been granted by the Hon'ble High Court, nor has the appeal been admitted. The Ld. DR placed full reliance on the impugned penalty order. 7. The Ld. DR further placed reliance on the judgment of the Hon'ble Supreme Court in CIT v. McDowell & Co. Ltd. (1985) 154 ITR 148 (SC), wherein it was held that tax planning within the boundaries of law is permissible, but the benefit of Section 80-IC cannot be extended beyond the legislative intent. Further reliance was placed on the decision in Union of India v. Dharmendra Textile Processors (2008) 306 ITR 277 (SC), where the Hon'ble Supreme Court held that the levy of penalty for underreporting of income is mandatory once a wrongful claim is established, irrespective of the assessee's intent. 8. On the other hand, the Ld. AR contended that the imposition of penalty under Section 270A is discretionary in nature. The addition in question pertains solely to the disallowance of deduction under Section 80-IC. Accordingly, the determination as to whether the case falls under underreporting or misreporting o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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