GRANULES INDIA LIMITED,HYDERABAD vs. DCIT., CIRCLE-2(1), HYDERABAD

ITA 1295/HYD/2025Status: DisposedITAT Hyderabad24 December 2025AY 2020-21Bench: SHRI MANJUNATHA G (Accountant Member), SHRI RAVISH SOOD (Judicial Member)18 pages
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What did the Tribunal hold?

The Tribunal held that a claim made based on judicial precedent at the time of filing the return, even if later altered by retrospective legislation, cannot be considered under-reporting of income. The assessee's voluntary surrender of the claim during assessment proceedings further supported the bona fide nature of the claim, making the penalty unsustainable.

What were the facts?

The assessee claimed a deduction for Health and Education Cess (HEC) based on prevailing judicial pronouncements. Following a retrospective amendment by the Finance Act, 2022, which clarified that 'tax' includes 'cess' for Section 40(a)(ii), the assessee offered this claim for disallowance during assessment proceedings. The Assessing Officer (AO) disallowed the claim and levied a penalty under Section 270A.

What were the issues?

Whether a penalty under Section 270A for under-reporting of income is leviable when the original claim was based on prevailing judicial pronouncements and was subsequently surrendered due to a retrospective legislative amendment? Whether the procedural provisions for surrendering such claims were operational at the time of assessment?

Which sections of the Income-tax Act were involved?

Section 270A,Section 40(a)(ii),Section 155(18)

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Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad

Before: SHRI MANJUNATHA G & SHRI RAVISH SOOD

Hearing: 22/12/2025

PER RAVISH SOOD, J.M: The present appeal filed by the assessee company is directed against the order passed by the CIT(Appeals), NFAC, Delhi, dated 24.06.2025, which in turn arises from the order passed by the AO under Section 270A of the Income-tax Act, 1961, dated 27.09.2022, for the Assessment Year 2020-21. The assessee company has assailed the impugned order of the CIT(Appeals) on the following grounds of appeal before us:

ITA No.1295/Hyd/2025 2

“1. On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals), NFAC, Delhi [CIT(A)] erred in law

The order continues below.

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