CLARCOR INDIA PRIVATE LIMITED,NAGPUR vs. DEPUTY COMMISSIONER OF INCOME TAX, NEW DELHI

ITA 4535/DEL/2026Status: DisposedITAT Delhi08 October 2026AY 2017-185 pages
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What did the Tribunal hold?

The Tribunal held that the penalty under section 270A was not justified and directed its deletion. The Tribunal found that the TPO made an adjustment of Rs. 1,29,13,656/- under the Transfer Pricing provisions by computing a higher Arm's Length Price (ALP). It was undisputed that the assessee had maintained the prescribed Transfer Pricing documentation under section 92D, declared the international transaction in Form 3CEB, and disclosed all material facts as required by the Income-tax Act. In this factual context, the Tribunal considered the difference in ALP determination to be a matter of legal interpretation, not a result of under-reporting of income, misrepresentation, or suppression of facts. The Tribunal explicitly referred to section 270A(6)(d), which excludes income on account of differences in ALP determination from under-reported income, provided the assessee has complied with the prescribed documentation and disclosure requirements. Consequently, the penalty charged under section 270A(9)(a) read with section 270A(2)(g) was deemed not justified and was deleted. The appeal of the assessee was allowed.

What were the facts?

The assessee, CLARCOR INDIA PRIVATE LIMITED, filed its return of income for Assessment Year 2017-18, declaring a loss. Due to international transactions with associated enterprises, the case was referred to the Transfer Pricing Officer (TPO). The TPO proposed an adjustment of Rs. 1,29,13,656/- for Arm's Length Price (ALP) determination. The assessee accepted this adjustment. Subsequently, the Assessing Officer (AO) initiated penalty proceedings under section 270A of the Income Tax Act, 1961, for under-reporting of income due to misreporting, imposing a penalty of Rs. 85,39,280/-. The Commissioner of Income Tax Appeals (CIT-A) dismissed the assessee's appeal against this penalty order. The assessee then filed an appeal before the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the penalty imposed under section 270A of the Income Tax Act, 1961, by the CIT(A) is illegal and bad in law, given that it was imposed while issuing an order under section 250? 2. Whether the CIT(A) erred in initiating and imposing penalty under section 270A by not appreciating the information and material on record? 3. Whether there was any occasion for the assessee to have not computed its arm's length price in accordance with section 92C of the Act? 4. Whether the adjustment proposed by the TPO, leading to a higher ALP computation than the assessee's, amounts to misrepresentation or suppression of facts, thereby justifying penalty under section 270A? 5. Whether the CIT(A) erred in violating the provisions of section 270A(6)(d) by not appreciating the carve-out for additions made in conformity with the TPO's ALP determination, where the assessee maintained necessary documentation and disclosed material facts? 6. Whether the penalty under section 270A(9) is wrongly charged at 200% given that the assessee reported all international transactions and there was no misrepresentation or suppression of facts? 7. Whether acceptance of TP adjustment by the assessee implies misrepresentation or suppression of facts as per section 270A(9)(a)? Assessee's Contention: The penalty under section 270A was levied on account of a TP adjustment arising from a different interpretation by the TPO. The assessee contends that it computed ALP in good faith, maintained all required documentation under section 92D, declared international transactions in Form 3CEB, and disclosed all material facts. The difference in ALP computation is a matter of legal interpretation and not misrepresentation or suppression of facts, and is protected under section 270A(6)(d). The penalty under section 270A(9)(a) is therefore not justified. Revenue's Contention: The learned DR relied on the orders of the AO and CIT(A).

Which sections of the Income-tax Act were involved?

Section 270A,Section 250,Section 92C,Section 92CA,Section 92D,Section 270A(6)(d),Section 270A(9)(a),Section 270A(2)(g),Section 270A(9)

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Income Tax Appellate Tribunal, DELHI

Before: SHRI SATBEER SINGH GODARA, JUDICIAL & SHRI NAVEEN CHANDRAwith SA No. 327/DEL/2026

Heard together (2 matters)

SA No. 327/DEL/2026
ITA No.4535/DEL/2026

Read from the judgment's own cause title. This page is filed under one of them.

PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :

This matter is instituted by the assessee, alongside corresponding Stay Application filed by the assessee. These proceedings are preferred against the consolidated appellate order passed by the Learned Commissioner of Income Tax Appeals, Delhi - 44 (CIT-A), on 13.03.2026 under section 250(6) of the Income Tax A

The order continues below.

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