NASCENT INFO TECHNOLOGIES PRIVATE LIMTIED,AHMEDABAD, GUJARAT vs. INCOME TAX OFFICER, WARD 3(1)(1), AHMEDABAD, AHMEDABAD, GUJARAT

ITA 2906/AHD/2026Status: DisposedITAT Ahmedabad23 October 2026AY 2017-187 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that a mere disallowance of a claim does not automatically amount to misreporting of income under Section 270A of the Act. The Revenue must establish that the case falls within the specific circumstances prescribed under Section 270A(9). In the present case, the penalty was levied on account of the disallowance of employees' contribution towards PF and ESI. However, the material on record did not establish that the assessee's case fell within any of the categories of misreporting specified under Section 270A(9). The mere disallowance of the claim, by itself, was not sufficient to justify the levy of penalty for misreporting. Respectfully following a co-ordinate bench decision in Hiro Mulchand Tanwani v. ITO, the Tribunal held that the penalty for misreporting of income was not sustainable. Accordingly, the order of the Ld. CIT(A) was set aside, and the penalty of ₹4,42,866/- was deleted. The grounds relating to the levy of penalty were allowed. The remaining grounds were not adjudicated as they became academic.

What were the facts?

The assessee, Nascent Info Technologies Pvt. Ltd., filed an appeal against the order of the Commissioner of Income-Tax (Appeals)/National Faceless Appeal Centre, Delhi, dated 19.07.2026. This order confirmed a penalty of ₹4,42,866/- levied under Section 270A of the Income-tax Act, 1961, for Assessment Year 2017-2018. The penalty stemmed from the disallowance of the assessee's employees' contribution towards PF/ESIC amounting to ₹7,16,611/-, which was deposited beyond the statutory due dates. The assessment order making this disallowance had attained finality. The penalty proceedings were initiated alleging misreporting of income, and the penalty order was dated 20.03.2025.

What were the issues?

The Tribunal had to decide the following questions: 1. Whether the penalty of ₹4,42,866/- confirmed by the Ld. CIT(A) under Section 270A of the Act is erroneous and ought to be quashed. 2. Whether the penalty order dated 20.03.2025 was barred by limitation under Section 275(1)(a) of the Act. 3. Whether the Ld. CIT(A) erred in sustaining the penalty for "misreporting" without a clear and specific charge in the notice and without establishing that the assessee's case falls within any clause of Section 270A(9). 4. Whether the Ld. CIT(A) erred in treating the disallowance of employees' contribution towards PF/ESIC as "misreporting" of income. 5. Whether the Ld. CIT(A) erred in failing to give effect to the statutory exclusion contained in Section 270A(6)(a). 6. Whether the penalty was confirmed without properly considering the assessee's replies and objections. 7. Whether the Revenue established that the under-reporting was "in consequence of misreporting" under Section 270A(8) read with Section 270A(9). Assessee's Contentions: The penalty order was erroneous and barred by limitation. The penalty for "misreporting" was unsustainable as there was no specific charge and the conditions of Section 270A(9) were not met. The disallowance of delayed PF/ESIC contribution should not be treated as misreporting, especially as there was divergent judicial opinion at the time of filing the return, and the issue was settled later by the Supreme Court in Checkmate Services Pvt. Ltd. The claim was bona fide, and Section 270A(6)(a) should apply. The Revenue failed to establish "misreporting". Revenue's Contentions: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 270A,Section 275(1)(a),Section 270A(9),Section 270A(6)(a),Section 270A(8),Section 250,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD

For Appellant: Shri Satyaprakash, AR
For Respondent: Shri Kalpesh Rupavatia, Sr. DR
Hearing: 22.10.2026Pronounced: 23.10.2026

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:

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This appeal has been filed by the assessee against the order dated 19.07.2026 passed by the Commissioner of Income-Tax (Appeals)/National Faceless Appeal Centre, Delhi (hereinafter referred to as ‘Ld. CIT (A)’ in short), under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’ in short) for Assessment Year 2017- 2018. ITA No.2906/AHD/2026, AY-2017-18 Nascent Info Technologies Pvt. Ltd. - 2–

2.

The Assessee has raised the following grounds of Appeal:-

1.

On the facts and in the circumstances of the case and in law, the order passed by the Ld. CIT(A) confirming the penalty of Rs.4,42,866/-under section

The order continues below.

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