JETSYNTHESYS PRIVATE LIMITED,PUNE vs. DCIT, CIRCLE-7, PUNE, PUNE

at the time of hearing.”

3. Facts of the case, in brief, are that the assessee is a Private Limited Company filed its return of income on 22-11-2017 declaring a loss of Rs.(-) 26,35,89,143/-. Vide order dated 17-12-2019, assessment order u/s 143(3) of the Act was passed determining loss at Rs.(-)26,31,45,460/- as against the loss returned by the assessee at Rs.(-)26,35,89,143/-. The above assessed loss includes disallowance of Rs.4,43,505/- on account of delayed payment of Employees’ PF and ESIC. Vide order dated 13.02.2024 Assessing Officer also imposed penalty of Rs.2,74,100/- u/s 270A(9) of the Act for under-reporting of income in consequence of miss-reporting thereof.

4. The assessee preferred an appeal before the Ld. CIT(A)/NFAC against the quantum order as well as the penalty order. The Hon’ble Apex Court’s order passed in the case of Checkmate Services (P) Ltd. vs. CIT, (2022) 143 taxmann.com 178 (SC). However, assessee contested penalty appeal & after considering the reply of the assessee, Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee & confirmed the penalty of Rs.2,74,100/- imposed u/s 270A(9) of the IT Act. It is this order against which the assessee is in appeal before this Tribunal.

5. Ld. AR appearing from side of the assessee submitted before us that the order passed by Ld. CIT(A)/NFAC is unjustified. Ld. AR submitted that the issue involved in the present case is an interpretational issue and question of law therefore question of imposition of penalty does not arise. Ld. AR submitted before the Bench that the assessee neither under-reported the income nor misreported the income. Ld. AR also submitted that at the time of preparation of books of accounts the issue of taxability of belated payment of employee’s PF and ESIC was debatable and various Hon’ble High Courts were of the view that the payment made before furnishing the return of income was allowable and the issue 2022 when Hon’ble Apex Court gave the decision in the case of Checkmate Services (P) Ltd. vs. CIT, (2022) 143 taxmann.com 178 (SC). Accordingly, Ld. AR submitted that admittedly the payment of employee’s PF and ESIC was made by the assessee and was rightly debited in the profit & loss account on the basis of law prevailing at the time of preparation of books of accounts. Ld. AR submitted that disallowance of any expenditure does not attract penalty. In support of this contention, Ld. AR relied on various judgements including judgement passed by Hon’ble Supreme Court in the case of CIT, Ahmedabad vs. Reliance Petroproducts (P.) Ltd. [2010] 189 Taxman 322 (SC), wherein under identical facts Hon’ble Court deleted the penalty u/s 271(1)(c) of the Act. Accordingly, Ld. AR requested before the bench to delete the penalty of Rs.2,74,100/- imposed u/s 270A(9) of the Act.

6. Ld. DR appearing from side of the Revenue relied on the orders passed by the subordinate authorities and requested to confirm the same.

Reliance Petroproducts (P.) Ltd. [2010] 189 Taxman 322 (SC) wherein Hon’ble Court deleted the penalty u/s 271(1)(c) of the Act by observing as under :- “10. It was tried to be suggested that section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form the part of the total income. It was, therefore, reiterated before us that the Assessing Officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the Return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c). If we accept the contention of the revenue then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature.”