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Facts
The appellant, Uranium Corporation of India Limited, a public sector undertaking, filed its income tax return declaring a loss for A.Y. 2018-19. The Assessing Officer imposed a penalty of Rs. 1,28,22,090/- under Section 270A for underreporting income, primarily due to the non-disallowance of CSR expenses, which became statutorily disallowable from A.Y. 2015-16. The CIT(A) subsequently deleted this penalty, finding that the assessee had cooperated, admitted the inadvertent error by its accountant, disclosed all material facts, and the mistake had no adverse impact on revenue, especially as the assessee was paying tax under Section 115JB.
Held
The Income Tax Appellate Tribunal upheld the decision of the CIT(A) to delete the penalty. The Tribunal acknowledged that the assessee is a public sector undertaking, running in losses, and had already paid tax under Section 115JB of the Act. It was noted that the company itself admitted the mistake, attributing it to an inadvertent error by its Accountant/Auditor, and therefore, the entire company should not be held responsible for underreporting of income.
Key Issues
Whether the CIT(A) erred in deleting the penalty levied under Section 270A for underreporting income due to the non-disallowance of CSR expenses; and whether an inadvertent error by an accountant, leading to a disallowance, warrants a penalty under Section 270A when the assessee is a public sector undertaking running in losses and paying tax under Section 115JB.
Sections Cited
Section 270A, Section 37(1) Explanation 2, Section 270A(2)(g), Section 270AA, Section 143(3), Section 143(3A), Section 143(3B), Companies Act, 2013 Section 135, Section 115JB
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Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI
Before: SHRI GEORGE MATHAN & SHRI RATNESH NANDAN SAHAY
Assessee represented by Shri Anubhav Goel, A.R. Department represented by Smt. Rinku Singh, CIT-DR Date of hearing 10/06/2025 Date of pronouncement 10/06/2025 O R D E R PER: BENCH 1. This appeal by the revenue is directed against the order of National Faceless Appeal Centre, Delhi (NFAC/learned Commissioner of Income Tax (Appeals), (in short, the ld. CIT(A) dated 20/07/2023 for the A.Y. 2018-19. In this appeal, the revenue has raised following grounds of appeal:
1. On the facts and circumstances, the CIT(A) has erred in deleting the penalty levies u/s 270A of the I.T.Act, 1961 by observing that the disallowance has no adverse impact on revenue without appreciating the fact that the assessee company had claimed wrong expenses during the year under consideration in contravention to explanation 2 of section 37(1) of the act to increase business loss and carried forward such increased business loss for the purpose of set off with the income of future years and thus effect the impact on revenue adversely.
2. On the facts and circumstances, the CIT(A) has erred in deleting the penalty levies u/s 270A of the I.T.Act, 1961 by observing that the disallowance has no adverse impact on revenue whereas the fact was that the assessee company had claimed wrong expenses, thereby misrepresented the facts and figure, liable for impositionof penaltyu/s270AoftheI.T.Act1961.
3. On the facts and circumstances, the CIT(A) has erred in deleting the penalty levied u/s 270A of the I.T.Act; 1961 without considering the provisions of section 270A(2)(g) of the I.T.Act 1961 which says that' a person shall be considered to ITA 205/Ran/2023 DCIT Vs. Uranium Corporation of India have underreported his income, if the income assessed or reassessed has the effect of reducing the loss or converting such loss into income'.
4. On the facts and circumstances, the CIT(A) has erred in deleting the penalty levied u/s 270A of the I.T.Act, 1961 by holding that to deny immunity from imposition of penalty and prosecution make the impugned order manifestly arbitrary while the fact is that the assessee company had never made any application in form 68 before the assessing officer for grant of immunity from imposition of penalty as per the provisions of section 270AA of the I.T.Act, 1961 5. Other grounds, if any will be raised at the time of hearing."
Facts of the case, in brief, are that the appellant company has filed its return of income declaring loss of Rs. 75,86,55,618/-. The case of appellant was selected under CASS and statutory notices were issued from time to time to make compliance. The Assessing Officer vide its order dated 22/03/2021 for the assessment year under consideration, assessed loss of the appellant at Rs. 73,85,52,574/- under Section 143(3) r.w.s. 143(3A) and 143(3B) of the Income Tax Act, 1961 (in short, the Act). The Assessing Officer further imposed penalty of Rs. 1,28,22,090/- under Section 270A of the Act on the ground that the assessee had under reported its income for the assessment year under consideration. A detailed chart is also given in the body of the said penalty order.
Aggrieved by the penalty order, the appellant company preferred appeal before the ld. CIT(A), who vide the impugned order, deleted the said penalty on the ground that the appellant company had cooperated during the assessment proceedings and accepted the mistake made by them which has no impact on revenue loss. The appellant company had also clearly stated the facts during the penal proceedings and had disclosed all material facts without any suppression/omission in its return of income.
2 I ITA 205/Ran/2023 DCIT Vs. Uranium Corporation of India 4. Aggrieved by the order of ld. CIT(A), the revenue has filed this appeal before us.
The ld. CIT-DR relied on the order of Assessing Officer and justified the imposition of said penalty.
The ld. AR of the appellant, on the other hand, submitted a paper book in which it was submitted that the appellant company is a public sector company in strategic department of atomic energy, engaged in querying and mining and has been incurring CSR expenditure as per the guidelines of Ministry of Heavy Industries which is mandatory for the appellant company. It was submitted by the ld. AR that until the CSR expenditure made compulsory under Companies Act, 2013 via Section 135 and such expenditure being made disallowable under Section 37 w.e.f. A.Y. 2015-16, the company had been claiming such expenditure as allowable. Only in A.Y. 2009-10, CSR expenditure was disallowed even there was no specific provision like Section 37 to disallow it. However, the Hon'ble ITAT allowed it on the ground that such expenditure is mandated by the government and were incurred to help villages living in the vicinity of query and mines. Department accepted it and did not file appeal against it.. In the A.Y. 2012-13 and 2014-15, the Assessing Officer again disallowed the CSR expenses which is pending in ITAT awaiting herein. Now after amendment w.e.f. A.Y. 2015-16, the assessee suo moto took cognizance of amendment in Section 37 and started making disallowances and filing returns of income in all subsequent assessment year except in the A.Y. 2018- 19 wherein due to inadvertent error by the Accountant, disallowance was not made. Even in the subsequent years, the disallowance was made by the ITA 205/Ran/2023 DCIT Vs. Uranium Corporation of India assessee itself. The ld. AR further submitted that the penalty should not be imposed under Section 270A of the Act for making inadvertent error which was subsequently rectified. The ld. AR in his submission submitted that even the show cause notice issued under Section 270A of the Act was not clear and communicative so that the assessee can effectively give its response. On deciphering the notice, it is clear that the Assessing Officer has initiated the proceedings in a very casual manner and only for the sake of issuing notice. He has not applied his mind specially when charge is of misreporting of income. If there is no specific charge, such notice only has to be treated as invalid. It was finally submitted by the ld. AR that since the income of the assessee has been assessed on book profit under Section 115JB of the Act, thus causing no revenue loss and therefore on this count also, penalty is not imposable. The ld. AR further placed reliance on the various decisions in its favour that for making inadvertent error, no penalty should be imposed.
We have considered the rival submissions and found that the assessee is a public sector undertaking and has been filing regular returns of income and following the rules and regulations and instructions being issued from time to time by the various government departments and the appellant has no discretion to disobey the same. The company is running in losses and has incurred loss even in the assessment year under consideration, however, paying tax as per Section 115JB of the Act. Since the appellant company itself has admitted the mistake committed by it due to some errors committed by the Accountant/Auditor of the company, the entire company cannot be held responsible for underreporting of income. Since the company is running in loss ITA 205/Ran/2023 DCIT Vs. Uranium Corporation of India and tax has already been paid under Section 115JB of the Act, the penalty under Section 270A of the Act is not required to be imposed in this case. In view of the aforesaid facts and circumstances of the case, we do not find any infirmity in the order of ld. CIT(A) in deleting the penalty levied under Section 270A of the Act, therefore, we uphold the same.
In the result, this appeal of the revenue is dismissed. Order announced in open court on 10th June, 2025.