DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2 1 1 , VADODARA, VADODARA vs. UNIMED TECHNOLOGIES LIMITED, PANCHMAHAL

ITA 279/AHD/2026Status: DisposedITAT Ahmedabad03 March 2026AY 2016-17Bench: DR. BRR Kumar (Vice President), Shri T. R. Senthil Kumar (Judicial Member)7 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletion of penalty under Section 271(1)(c). It was held that major additions forming the basis of the penalty were deleted in quantum proceedings, and the sustained additions involved highly debatable issues with full disclosure by the assessee. Relying on Supreme Court judgments, the Tribunal concluded that mere unsustainable claims or debatable issues, especially with complete disclosure, do not warrant penalty.

What were the facts?

During the assessment for AY 2016-17, the AO made various disallowances and initiated penalty proceedings under Section 271(1)(c) for furnishing inaccurate particulars. The CIT(A) granted substantial relief in the quantum appeal, deleting most additions and restricting others related to consultancy fees and foreign exchange fluctuation loss. The AO, however, levied a penalty of Rs. 1,61,42,867/- which the CIT(A) subsequently deleted, finding that a major portion of the additions did not survive and remaining issues were debatable. The Revenue appealed the deletion of penalty, specifically for foreign exchange loss.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when substantial additions are deleted by the CIT(A) or when the issues are debatable involving interpretation of accounting standards or capital vs. revenue expenditure, despite full disclosure by the assessee.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 43A

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Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH

Before: DR. BRR Kumar & Shri T. R. Senthil Kumar

PER: T.R. SENTHIL KUMAR, JUDICIAL MEMBER

This appeal is filed by the Revenue as against the appellate order dated 29-11-2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), confirming the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2016-17. I.T.A No. 279/Ahd/2026 A.Y. 2016-17 2

2.

Brief facts of the case is that the assessee is a company engaged in the business of manufacturing and tradi

The order continues below.

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