NAZIR AHMED,KOLKATA vs. ACIT CIRCLE 32 KOLKATA, KOLKATA

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ITA 807/KOL/2026Status: DisposedITAT Kolkata13 August 2026AY 2017-1812 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty under Section 270A was not leviable as the assessee's claim was bona fide, supported by a prevailing High Court judgment at the time, and all material facts were disclosed. The subsequent reversal of the legal position by the Supreme Court did not retrospectively make the claim mala fide or constitute under-reporting.

What were the facts?

The assessee's appeal concerns a penalty levied under Section 270A for AY 2017-18. The penalty arose from a disallowance of delayed deposit of employees' PF contribution, which was initially accepted based on a High Court ruling but later disallowed following a Supreme Court decision.

What were the issues?

Whether penalty under Section 270A is leviable when the assessee acted bona fide based on a prevailing High Court judgment, even if later overturned by the Supreme Court, and whether the addition constituted 'under-reporting' or 'misreporting'.

Which sections of the Income-tax Act were involved?

Section 270A,Section 143(3),Section 263,Section 36(1)(va)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH AT KOLKATA

Before: SHRI YOGESH KUMAR US & SHRI RAKESH MISHRA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘C’ BENCH AT KOLKATA Before SHRI YOGESH KUMAR US, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No(s). 807/KOL/2026 Assessment Year(s) 2017-18 Nazir Ahmed ACIT, Circle 32, Kolkata Vs. (Appellant) (Respondent) PAN: ACZPA1769M Appearances: Assessee represented by : Aashis Brahma, CA. Department represented by : Subrahmanyam Tota, Sr. DR. Date of concluding the hearing : 12.08.2026 Date of pronouncing the order : 13.08.2026 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for AY 2017-18 dated 19.12.2025. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: "1. That the order passed by the Ld. CIT(A), NFAC confirming the penalty imposed u/s 270A is bad in law, contrary to facts, arbitrary and liable to be quashed. 2. That the Ld. CIT(A) erred in upholding the levy of penalty u/s 270A on the ground that the Appellant had not preferred an appeal against the assessment order passed u/s 143(3) r.w.s. 263, without appreciating that quantum and penalty proceedings are separate and distinct, and non- filing of appeal against quantum does not automatically justify levy of penalty.

“■ A plain reading of Section 270A(1) indicates that the Assessing Officer "may" direct that a person shall be liable to pay a penalty. The use of the word "may" clearly shows that the levy of penalty is discretionary and not mandatory. It is a well-settled principle of law that penalty is not an inevitable consequence in every case where an addition is made. [Para 13] ■ Secondly, there is merit in the Petitioner's submission that in the present case, there is no under-reporting of income. The adjustment/disallowance regarding the employees' contribution to PF/ESI was already made by the Centralised Processing Centre (CPC) while processing the return under Section 143(1)(a). An intimation issued under Section 143(1)(a) dated 08.05.2020 is placed on record. On perusal of the same, it can be seen that against the returned income of Rs. 70.11 crore, the income determined is Rs. 70.38 crore after adding a sum of Rs. 26.73 lakh, which was on account of disallowance under Section 36(1)(va). Further, the same

Deputy/Assistant Registrar ITAT, Kolkata Benches Kolkata

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