LEGRAND NETHERLANDS B.V.,NETHERLANDS vs. ACIT (IT) CIRCLE 3(1)(2), MUMBAI

ITA 1882/MUM/2026Status: DisposedITAT Mumbai16 July 2026AY 2017-1810 pages
AI SummaryAllowed

What were the facts?

The assessee declared income as capital gains, but the AO reclassified a portion as deemed dividend under section 2(22)(d). The total income remained the same, but its composition changed. The tax paid by the assessee was higher than that calculated by the AO after reclassification.

What did the Tribunal hold?

The Tribunal held that reclassification of income from capital gains to dividend, where the tax liability did not increase and there was no suppression or concealment of income, does not constitute under-reporting of income for the purpose of levying penalty under section 270A.

What were the issues?

Whether penalty under section 270A is leviable solely on account of reclassification of income when the total income and tax liability do not increase, and there is no suppression of income.

Which sections of the Income-tax Act were involved?

Section 270A,Section 2(22)(d)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “I” BENCH, MUMBAI

Before: SMT.BEENA PILLAI, JM & SHRI ARUN KHODPIA, AM

Hearing: 30.04.2026

Per Arun Khodpia, AM: This appeal of the assessee is directed against the order of the Commissioner of Income Tax Appeals – 57, Mumbai [in short, “the Ld. CIT(A)”], dated 10.12.2025 for the Assessment Year (AY) 2017-18, arises from the order under section 270A of the Income Tax Act, 1961 [in short, “the Act”] dated 25.07.2024, passed by Assessing Officer [in short, “the Ld.AO”]. The grounds of appeal raised by the assessee are as under:

“1. Ground No. 1-Imposition of penalty under section 270A of the Act

1.1.

On facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) ('Ld. CIT(A)')

The order continues below.

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