CREATIVE ASHTECH POWER PROJECTS PVT. LTD.,MUMBAI vs. DCIT, CIRCLE-14(1)(2), MUMBAI
IN THE INCOME-TAX APPELLATE TRIBUNAL“C” BENCH,
MUMBAI
BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER
&
SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER
Creative
Ashtech
Power
Projects Private Limited, 7th
Floor, Raheja Point 1, Opp.
Vakola Market Nehru Road,
Santacruz
(East),
Mumbai–
400055, Maharashtra v/s.
बनाम
Deputy
Commissioner of Income
Tax,
Circle–
14(1)(2),
Room
No.
455,
Aayakar
Bhavan,
M.K.
Marg, Mumbai – 400020,
Maharashtra
स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AADCD1054F
Appellant/अपीलार्थी
..
Respondent/प्रतिवादी
Appellant by :
Shri Jitendra Sanghvi,AR
Respondent by :
Shri Virabhadra S. Mahajan, (Sr. DR)
Date of Hearing
30.06.2025
Date of Pronouncement
23.07.2025
आदेश / O R D E R
PER PRABHASH SHANKAR [A.M.] :-
The present appeal arising from the appellate order dated
21.09.2023 is preferred by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless
Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to penalty order passed u/s. 270A of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 15.03.2022 for the Assessment Year [A.Y.]
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The grounds of appeal are as under:- 1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) - National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred as “CIT(A)”) erred in confirming the action of the Addl/Jt./Dy./ACIT/ITO, NFAC, Delhi (hereinafter referred to as “Assessing Officer”] in levying penalty of Rs. 43,13,340 under section 270A of the Act on the alleged ground that the Appellant has under reported its income in consequence of misreporting of income. Your Appellant submits that under the facts and the circumstances of the Appellant's case penalty levied under section 270A of the Act is not leviable and the same ought to be cancelled. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the action of the Assessing Officer in levying penalty of Rs. 43,13,340 under section 270A(9)(e) the Act in respect of alleged misreporting of income of Rs. 67,79,508 towards foreign exchange gains of Rs. 69,79,508. Your Appellant submits that, income of Rs. 69,79,508 is accounted in the books account under the head “other income” therefore Penalty under clause (e) of section 270A(9) is not applicable and hence the penalty ought to be cancelled. 3. Brief facts of the case are that while finalizing the assessment u/s. 143(3) of the Act, an addition of Rs. 69,79,508/- was made on account of misreporting the receipt of Rs. 69,79,508/-. During the year under consideration, the assessee had earned Foreign Exchange gains amounting to Rs. 69,79,508/-. However, it did not report the same in its return and instead claimed it as an expenditure. Therefore, this exchange gain was brought to tax and penalty proceeding u/s. 270A(9) of the Act was initiated for misreporting of income by the AO. The addition made was not agitated by the assessee as no appeal was filed.
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Accordingly, the AO passed order imposing penalty u/s in respect of foreign exchange gains which it should have disclosed for taxation. He observed that if the case was not selected for scrutiny the same would have escaped the assessment. There is no provision other than filing revised return of income, to revise the total income. The revised computation of income of the assessee did not absolve the assessee from the default. This failure of the assessee to record the receipt in the books of account was having a bearing on total income. Hence, according him, this case clearly fell within the ambit of section 270A(9) (e) of the Act.
4. In the subsequent appeal before the ld.CIT(A), it was contented by the assessee that the impugned sum was not disclosed as income for the relevant year on account of inadvertent mistake and there was no deliberate act on its part. Rather, it was a bonafide mistake for which it was not liable to penalty for misreporting of income. However, the ld.CIT(A) rejected the explanation of the assessee holding that misinterpretation of the law does not give the assessee immunity from the repercussions of breaking it. It is clear that the assessee made a wrong claim of deduction in its P & L account, despite being such a big concern and without any doubt, many consultants at its disposal. In such a scenario, the claim of the assessee that it was bonafide mistake
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Creative Ashtech Power Projects Private Limited and erroneously claimed was not found acceptable as a bonafide explanation. He concluded that the assessee had clearly misrepresented the facts of the case by claiming deduction on account of foreign exchange gain of Rs. 69,79,508/- instead of offering the same to tax.
Therefore, its case falls within the purview of sec. 270A(9)(a) of the Act.
Accordingly, penalty of Rs. 43,13,340/- u/s 270A(9) of the Act for misreporting of income was upheld dismissing the appeal of the assessee.
5. Before us, the ld.DR has relied on the orders of the authorities below stating that the assessee made deliberate misreporting of income which came to light only because the assessment order was passed after due scrutiny or else would have gone unnoticed. Moreover, the assessee being a reasonably big corporate entity having on its rolls many tax consultants and advisors ,such a blatant mistake could not be considered as bonafide but is intentional act on its part. He further placed reliance on the coordinate bench decisions in the case of Sanjeev Kumar
Manchand Rajpoot(2023) 157 taxmann.com 747(Pune) and IBS
Software 158 taxmann.com 209(Ker) stating to be directly applicable to the facts of the case where also the impugned penalty pertained top section 270A of the Act.
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The ld.AR has argued that the AO has invoked a wrong section in holding the assessee guilty in terms of section 270A(9)(e) of the Act which states failure to record any receipt in books of account having a bearing on total income which is not applicable to the facts of the case as the assessee has duly recorded the impugned sum in its books of account. The ld.AR on the other hand has mainly placed reliance on the decision of Pune ITAT on Popat Karbhari Bhalerao 165 taxmann.com 291 in support of the ground that application of wrong section 270A(9)(e) made the penalty non maintainable. However, we find that the said decision is not squarely applicable to the facts of the present case where the ld.CIT(A) has rectified the mistake of invoking clause(e) in place of clause(a) to section 270A(9) of the Act exercising his plenary powers which was not the case in the cited decision. 7. We have carefully considered all relevant facts of the case. It would be appropriate to have a look at the penalty provisions u/s 270A(9) of the Act which reads as under: “(9)The cases of misreporting of income referred to in sub-section (8) shall be the following, namely:— (a)misrepresentation or suppression of facts; (b)failure to record investments in the books of account; (c)claim of expenditure not substantiated by any evidence;
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(d)recording of any false entry in the books of account;
(e)failure to record any receipt in books of account having a bearing on total income;
(f)failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply.”
7.1 It is evident that the assessee has not shown above income from Foreign Exchange gains in the return filled u/s 139(1) of the Act. It is also true that the assessee did not file any further quantum appeal and accepted the addition made by the AO. However, this does not absolve the assessee from penalty liability if the income disclosed in the return was previously undisclosed or underreported. The Hon'ble Supreme
Court in the case of Mak Data P. Ltd. Vs. CIT [2013] 358 ITR 593
(SC) has observed that it is trite law that voluntary disclosure does not release the assessee from the mischief of penal proceedings and the law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty.
7.2 We do not find any infirmity in the order of ld.CIT(A) in holding that the present case is covered by the provisions of section 270A(9)(a) instead of clause(e) of section 270A(9) of the Act which was incorrectly applied by the AO. The impugned amount clearly involved misreporting of income referred to in clause
(a) being
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Creative Ashtech Power Projects Private Limited misrepresentation or suppression of facts. The ld.CIT(A) has corrected this mistake of the AO in invoking wrong clause of section 270A(9) of the Act under the co-terminus powers conferred on him by the Act.
7.3
It is well-settled that powers of ld.CIT(A) are co- has plenary powers in disposing off an appeal; that the scope of his power is co-terminus with that of the ITO; that he can do what the ITO can do and also direct him to do what he failed to do. The hon'ble
Dattatreya [2011] 197 taxman 151 has held that "as a revisional authority Commissioner Appeals can revise not only the ultimate computation arrived at but every process which led to the ultimate computation or assessment".The Hon'ble Kerala High Court in the case of V. Subramonia Aiyr vs. CIT [1978] 113 ITR 685 held that "the power conferred on Appellate Authority by Section 246 which is exercised in accordance with procedure with Section 250 indicate the amplitude and width which is no less wide than that of an ITO and the P a g e | 8
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Appellate Authority could substitute the order of the ITO by one of his own."
4 In the case of Jute Corporation of India Ltd. vs. Commissioner of Income-tax and another reported in 187 ITR 688 the hon’ble Supreme Court noted with approval observation of the that " The Appellate Assistant Commissioner, therefore, has plenary powers in disposing of appeal. The scope of his power is co-terminus with that of the Income Tax Officer. He can do what the Income Tax Officer can do and also direct him to do what he has failed to do." It was observed that there was no reason why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income Tax Officer. The Act does not place any restriction or limitation on the exercise of appellate power. It was observed that:- " The above observations are squarely applicable to the interpretation of s. 25 1(1) (a) of the Act. The declaration of law is clear that the power of the Appellate Assistant Commissioner is co-terminus with that of the Income Tax Officer, if that he so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income Tax Officer. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise an Appellate Authority while hearing appeal
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Creative Ashtech Power Projects Private Limited against the order of a subordinate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations if any prescribed by the statutory provisions. In the absence of any statutory provision the Appellate Authority is vested with all the plenary powers which the subordinate authority may have in the matter. There appears to be no good reason and none was placed before us to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income Tax Officer."
7.5 In so far as the reliance placed by the ld.AR on the decision of Pune ITAT on Popat Karbhari Bhalerao 165 taxmann.com 291 is concerned, in support of the ground that application of wrong section 270A(9)(e) made the penalty non maintainable, we find that the said decision is not applicable to the facts of the present case where the ld.CIT(A) has rectified the mistake of the AO in invoking clause(e) in place of clause(a) to section 270A(9) of the Act exercising his plenary powers which was not the case in the cited decision.
7.6 In light of the above discussion, we conclude that the order passed by the ld.CIT(A) does not suffer from any infirmity and is therefore, upheld. Thus, the appeal filed by the assessee is dismissed.
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In the result, the appeal is dismissed. Order pronounced in the open court on 23.07.2025. SANDEEP GOSAIN PRABHASH SHANKAR (न्याययक सदस्य /JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER)
Place: म ुंबई/Mumbai
ददनाुंक /Date 23.07.2025
Lubhna Shaikh / Steno
आदेश की प्रयियलयि अग्रेयिि/Copy of the Order forwarded to :
1. अपीलार्थी / The Appellant
2. प्रत्यर्थी / The Respondent.
3. आयकर आयुक्त / CIT
4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT,
Mumbai
5. गार्ड फाईल / Guard file.
सत्यावपि प्रवि ////
आदेशानुसार/ BY ORDER,
उि/सहायक िंजीकार (Dy./Asstt.