BRAITHWAITE & CO. LTD.,,KOLKATA vs. DCIT, CIRCLE 1(1),, KOLKATA

ITA 1076/KOL/2026Status: DisposedITAT Kolkata07 October 2026AY 2021-20228 pages
AI SummaryAllowed

What were the facts?

The assessee, Braithwaite & Co. Ltd., is in appeal against the order of the National Faceless Appeal Centre, Delhi (NFAC), dated 04.02.2026, for Assessment Year 2021-22. The appeal concerns a penalty imposed under Section 270A of the Income-tax Act, 1961. The Assessing Officer (AO) initially imposed a penalty of ₹4,43,88,664/-, equivalent to 200% of the mis-reported income. The NFAC partly sustained the penalty, reducing it to ₹1,10,97,166/-, representing 50% of the under-reported income. The AO's assessment order, dated 03.12.2022, determined the total income at ₹18,05,43,456/- under normal provisions and ₹30,84,24,113/- as book profit under Section 115JB, against the declared income of ₹11,70,29,456/- and ₹24,49,10,113/-, respectively. The AO noted that the assessee failed to add provisions for tax payable amounting to ₹6,35,14,000/- to the profit after tax, leading to under-reporting of book profit.

What did the Tribunal hold?

The Tribunal held that the penalty imposed under Section 270A of the Income-tax Act, 1961, was not sustainable. The Tribunal noted that the assessee made an inadvertent mistake in computing book profit by not adding provisions for tax. While this mistake led to a lower book profit being returned, the assessment was ultimately made under Section 115JB of the Act, which resulted in a higher book profit than the income computed under normal provisions. The Tribunal reasoned that where adjustments are made to the book profit and income is assessed under Section 115JB, no penalty can be levied because the alleged mis-reporting had no impact on the tax payable under Section 115JB. The Tribunal relied on CBDT Circular No. 25/2015 and the decision of the Hon'ble Supreme Court in CIT vs. M/s. Nalwa Sons Investment Ltd. (which approved the Delhi High Court's decision), and other cited cases. The ratio decidendi is that if the assessment is based on the higher of the normal income or book profit (Section 115JB), and the alleged concealment or mis-reporting does not affect the tax payable under Section 115JB, then penalty under Section 270A is not leviable. The Tribunal set aside the order of the Ld. CIT(A) and directed the AO to delete the entire penalty. No issue was expressly left undecided.

What were the issues?

1. Whether the penalty imposed under Section 270A of the Income-tax Act, 1961, is sustainable when the assessment is made based on book profit under Section 115JB, and the alleged mis-reporting had no impact on the tax payable under Section 115JB. Assessee's Contentions: The assessee argued that the mistake in not adding provisions for tax to the book profit was inadvertent. They relied on CBDT Circular No. 25/2015, which clarifies that no penalty should be levied under Section 271(1)(c) (predecessor to Section 270A in this context) where additions/disallowances are made under normal provisions but tax is levied under MAT provisions (Sections 115JB & 115JC). The assessee also cited the Hon'ble Apex Court's decision in CIT vs. M/s. Nalwa Sons Investment Ltd. and other High Court and ITAT decisions, which held that no penalty can be levied when income is computed on the basis of book profit under Section 115JB, as the alleged concealment has no bearing on the tax payable under that section. Revenue's Contentions: The revenue's contentions are not explicitly recorded in the judgment, other than its role as the respondent.

Which sections of the Income-tax Act were involved?

Section 270A,Section 143(2),Section 142(1),Section 143(3),Section 144B,Section 115JB,Section 270A(9)(a),Section 143(1),Section 115JC,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

For Appellant: Shri Soumitra Choudhury &
For Respondent: Shri Sallong Yaden, DR
Hearing: 09.07.2026Pronounced: 07.10.2026

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 04.02.2026 for the AY 2021-22. 2. The only issue in various grounds of appeal is against the order of ld. CIT (A) partly sustaining the penalty amounting to ₹1,10,97,166/- being 50% of the under reported income as against the penalty imposed by the ld. AO of ₹4,43,88,664/- u/s 270A of the Income-tax Act, 1961 (the Act) at the rate of 200% of mis-reported income. Braithwaite & Co. Ltd.; A.Y. 2021-22

3.

The facts in brief are that the case of the assessee was selected for scrutiny and accordingly, notices u/

The order continues below.

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