SUNDARAM HOME FINANCE LTD.,CHENNAI vs. ITO, CORPORATE WARD-6(1), CHENNAI

ITA 1996/CHNY/2026Status: DisposedITAT Chennai23 September 2026AY 2014-1513 pages
AI SummaryDismissed

What were the facts?

The assessee, Sundaram Home Finance Ltd., filed its return of income for Assessment Year 2014-15 on November 29, 2014, disclosing a total income of Rs. 231,97,79,370/-. The assessment was completed by the ACIT on December 18, 2017, at a total income of Rs. 246,47,77,194/-, making additions of Rs. 2,56,04,824/- under Section 14A and disallowing Rs. 11,93,93,000/- under Section 36(1)(viii). Penalty proceedings under Section 271(1)(c) were initiated. The assessee appealed to the CIT(A), which granted partial relief. The Assessing Officer then levied a penalty of Rs. 1,47,90,069/- on March 18, 2022. The assessee appealed to the CIT(A) again, who set aside the penalty order to the Assessing Officer for re-computation under Section 275(1A) of the Act, considering the ITAT's order in quantum proceedings. The assessee is now in appeal before the ITAT against the CIT(A)'s order.

What did the Tribunal hold?

The Tribunal held that the order passed by the Learned CIT(A) is in consonance with the plain provisions of Section 275(1A) of the Act. The CIT(A) had rightly set aside the matter to the Assessing Officer for re-computation of the penalty as mandated by Section 275(1A), especially since the original assessment order was subject to appeals, and there was no subsisting assessment order until a fresh assessment was completed. The Tribunal found no illegality or perversity in the CIT(A)'s order and therefore did not interfere with it. However, the Tribunal clarified that all contentions raised by the appellant challenging the levy of penalty under Section 271(1)(c) itself are kept open before the Assessing Officer during the re-computation process. The appeal filed by the assessee was accordingly dismissed.

What were the issues?

1. Whether the Learned CIT(A) erred in directing the Assessing Officer to re-compute the penalty under Section 271(1)(c) with reference to the income finally assessed pursuant to the ITAT order, in accordance with Section 275(1A) of the Act, when the appellant contends it neither concealed income nor furnished inaccurate particulars. 2. Whether the Learned CIT(A) erred in confirming the penalty without appreciating that the claim made by the appellant was bonafide and based on a reasonable interpretation of law and judicial precedents, and that all material facts were disclosed. Assessee's Contentions: - The penalty is contrary to law, facts, and circumstances and liable to be set aside. - The claim made was bonafide and based on reasonable interpretation of law and judicial precedents. - All material facts relating to the claim under Section 36(1)(viii) and computation of disallowance under Section 14A were fully and truly disclosed. - The disallowance arose from a difference in interpretation and computation mechanism, not concealment. - The allocation between income eligible for Section 36(1)(viii) and other activities was debatable until the ITAT order. - The voluntary disallowance of Rs. 5,85,000/- under Section 14A demonstrated bonafides. - Disallowance under Section 14A was based on estimation, which cannot form the basis for penalty. - Issues relating to Section 36(1)(viii) and Section 14A are debatable, making penalty not leviable. - The CIT(A) disregarded established judicial decisions deleting penalties in cases of bonafide claims. - Reliance was placed on CIT vs. Reliance Petroproducts Private Limited (321 ITR 158), CIT, Puducherry Vs. M/s.The Cuddalore District Central Co-operative Bank Ltd, and Pr.CIT.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 250,Section 143(3),Section 14A,Section 36(1)(viii),Section 274,Section 275(1A),Section 246,Section 246A,Section 253,Section 260A,Section 261,Section 263,Section 264,Section 129,Section 274(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHENNAI BENCHES,

Before: SHRI INTURI RAMA RAO & SHRI SS VISWANETHRA RAVI

Pronounced: 23.09.2026

PER INTURI RAMA RAO, ACCOUNTANT MEMBER :

This appeal filed by the Assessee directed against the order passed by learned Commissioner of Income Tax(Appeals)[NFAC], dated 03.02.2026 passed u/s.250 of the Income Tax Act, 1961 for the Assessment Year 2014-15. 2. The Assessee raised the following grounds of appeal :

“1. The order passed by the Learned Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC) confirming the levy of penalty under

The order continues below.

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