CARNIVAL MANAGEMENT SERVICES PRIVATE LIMITED,BHOPAL vs. ACIT, CENTRAL CIRCLE 5(3), MUMBAI

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JM & SHRI ARUN KHODPIA, AM I.T.A. Nos.1654 &1655/Mum/2026 (Assessment Years: 2018-19 & 2019-20) Carnival Management Services ACIT, Central Circle 5(3) Room No.1906, 19th Floor, Air India Private Limited Vs. C-70, Hoshangabad Road, Building, Nariman Point, Mumbai- Vidyanagar Bhopal-462023 400021 PAN: AAECC6436F Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

Assesseeby : Shri Karan Goyal Revenueby : Shri Ajay Soneji, Sr. DR : 29.06.2026 Date of Hearing : 30.06.2026 Date of Pronouncement

O R D E R Per Bench: The captioned two appealsare preferred by the assessee, against the order of the Commissioner of Income Tax Appeals – 53, Mumbai [in short, “the Ld. CIT(A)”], both dated 17.12.2025 for the Assessment Years (AYs) 2018-19 and 2019-20. Both these appealshave arisen from the penalty orders u/s 270A of the Income Tax Act, 1961 [in short, “the Act”] passed by Central Circle 5(3), Mumbai [in short, “the Ld.AO”] dated 27.03.2022 and 04.03.2022, respectively. The grounds of appeal raised by the assessee in both the aforesaid appeals are as under:

ITA No. 1654 &1655/Mum/2025 Carnival Management Services Private Limited “Ground of Appeal for AY 2018-19 Ground No. 1 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the penalty of ₹1,13,664/- levied under section 270A of the Act without appreciating that the impugned penalty order is void ab initio, bad in law and liable to be quashed for want of proper satisfaction and valid jurisdictional foundation, and therefore the relief prayed for may kindly be granted to the Appellant. Ground No. 2 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming penalty at 200% by treating the case as one of "misreporting of income" under section 270A(9) without recording any specific finding as to which clause of section 270A(9)(a) to (f) is applicable, and without establishing that the case falls within any of the exhaustively defined categories of misreporting contemplated therein, and therefore the relief prayed for may kindly be granted to the Appellant. Ground No. 3 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the impugned expenditure, being interest on delayed payment of TDS, was fully disclosed in the audited financial statements and specifically reported in Clause 21(a) of Form 3CD, and there was complete disclosure of primary facts with no concealment, suppression or misrepresentation, and therefore the penalty confirmed under section 270A is unsustainable and relief may kindly be granted to the Appellant. Ground No. 4 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that mere disallowance of an expenditure based on interpretation of law automatically results in misreporting of income, without any finding of falsity of facts or deliberate concealment, and such disallowance cannot be equated with misreporting under section 270A(9), and therefore the relief prayed for may kindly be granted to the Appellant. Ground No. 5 That on the facts and in the circumstances of the case and in law, and without prejudice to the foregoing grounds, the Ld. CIT(A) failed to appreciate that even assuming the disallowance to be justified, the case at best falls within the scope of under-reporting under section 270A(2) and not misreporting under section 270A(9), and consequently penalty, if at all leviable, could only be imposed at 50% under section 270A(7) and not at 200%, and therefore appropriate relief may kindly be granted to the Appellant. Ground No. 6 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating that the claim was made on a bona fide understanding of law and with full disclosure of all material facts, and the case is squarely covered under section 270A(6)(a), which excludes such additions from the ambit of under-reported income, and therefore the penalty levied under section 270A is liable to be deleted and the relief prayed for may kindly be granted to the Appellant.

ITA No. 1654 &1655/Mum/2025 Carnival Management Services Private Limited Ground No. 7 That the Appellant craves leave to add, amend, alter or withdraw any of the above grounds at or before the time of hearing. Ground of Appeal for AY 2019-20 Ground No. 1 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the penalty of 28,60,832/-levied under section 270A of the Act without appreciating that the impugned penalty order is void ab initio, bad in law and liable to be quashed for want of proper satisfaction and valid jurisdictional foundation, and therefore the relief prayed for may kindly be granted to the Appellant. Ground No. 2 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming penalty at 200% by treating the case as one of "misreporting of income" under section 270A(9) without recording any specific finding as to which clause of section 270A(9)(a) to (f) is attracted. Neither the penalty order nor the appellate order establishes that there was misrepresentation or suppression of facts, failure to record investments or receipts, recording of false entries, claim of expenditure without evidence, or failure to report any transaction as contemplated under section 270A(9). In absence of statutory satisfaction, penalty at 200% is unsustainable and relief may kindly be granted to the Appellant. Ground No. 3 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the addition made u/s 41(1) is based on a legal presumption of cessation of liability and not on discovery of any false entry or suppression of income. The liabilities were duly recorded in the books of account and disclosed in financial statements. Therefore, the essential ingredients of misreporting under section 270A(9) are absent and penalty is liable to be deleted. Ground No. 4 That the Ld. CIT(A) erred in law in holding that addition made on account of alleged cessation of liability automatically results in misreporting of income. An addition based on interpretation or application ofdeeming provisions cannot be equated with deliberate misreporting, and therefore penalty under section 270A(9) is unjustified. Ground No. 5 That without prejudice to the above, even assuming the addition to be justified, the case at best falls within the ambit of under-reporting under section 270A(2) and not misreporting under section 270A(9), and therefore penalty, if at all leviable, could only be at 50% under section 270A(7) and not 200%, and appropriate relief may kindly be granted. Ground No. 6 That the Ld. CIT(A) failed to appreciate that the Appellant had offered explanation in respect of the outstanding liabilities and there was no material to establish falsity of

ITA No. 1654 &1655/Mum/2025 Carnival Management Services Private Limited explanation. The case is covered under section 270A(6)(a), and therefore penalty is liable to be deleted and relief may kindly be granted to the Appellant. Ground No. 7 That the Appellant craves leave to add, amend, alter or withdraw any of the above grounds at or before the time of hearing.” 2. The assessee has challenged the penalties imposed on it, vide aforesaid orders u/s 270A of the Act on account of improper satisfaction and invalid jurisdictional foundation. It is also alleged by the assessee that the penalties are confirmed treating the same as misreporting of income u/s 270A(9), without recording any specific finding as to which clause of section 270A(9)(a) to (f) is attracted. The assessee further made certain more contentions on the legal as well as factual aspects of the penalties.

ITA No. 1654 &1655/Mum/2025 Carnival Management Services Private Limited compliance or submission before the Ld. CIT(A). The order of Ld. CIT(A) therefore, had culminated on ex parte basis. Ld. CIT(A) reiterated all the facts from the penalty order passed by Ld. AO, however, had decided the issue in de hors the submissions of the assessee, though he referred to statement of facts furnished by the assessee along with the appeal before him.

ITA No. 1654 &1655/Mum/2025 Carnival Management Services Private Limited be at liberty to furnish all the necessary submissions and raise its contentions before the Ld. CIT(A), which shall be addressed by the Ld. CIT(A) in accordance with the mandate of law.

Order pronounced in the open court on 30-06-2026.

Sd/- Sd/- (ARUN KHODPIA) (NARENDER KUMAR CHOUDHRY) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated : 30-06-2026. Ankit K., Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai