TaxTMI 
TaxTMI 
2025 (8) TMI 1375
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....d under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the "Act") and relates to Assessment Year (A.Y.) 2020-21 confirming the levy of penalty under Section 270A(2) of the Act for underreporting of income. 2. The facts of the case are that in assessment proceedings the assessee was noted to have claimed deduction of education cess paid amounting to Rs. 15,94,943/-. When confronted with the fact that in view of the latest amendment made in section 40(a)(ii) of the Act, vide Finance Act, 2022 with retrospective effect from 01.04.2005, the education cess was categorically not allowable as deduction, the assessee accepted the disallowance of the same and accordingly, the impugned sum was added to the returned income of t....
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....vided for immunity from the levy of penalty on account of the retrospective amendment made under section 40(a)(ii) of the Act subject to assessee's surrendering the same to the AO in the prescribed form and within the prescribed time and after paying the tax due thereon. The Ld. CIT(A), however, rejected this argument of the assessee pointing out that the prescribed form was notified only w.e.f. 01.10.2022 and the prescribed time was on or before the 31.03.2023 and the assessee having not made any such application therefore, it was not saved from levy of penalty in terms of 2nd Proviso to section 155(18) of the Act. 4. Aggrieved by the same the assessee has come up in appeal before us raising the following grounds of appeal: "1.....
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....n the case of Chambal Fertilizers & Chemicals Ltd. vs JCIT ITA No.52/2018 Dt. 31-07-2018 prevailing at that point of time, i.e A.Y. 2020-21, and categorically holding such claims allowable. That it was only subsequently, by virtue of a retrospective amendment made to section 40(a)(ii) by Finance Act,2022 that the claim was treated not allowable and when confronted with the amendment the assessee fairly submitted and surrendered the said claim for disallowance. That therefore, the assessee could not be charged with having underreported any income for levy of penalty under section 270A(2) of the Act. He further referred to the provisions of Section 155(18) of the Act and pointed out that even the said section provided immunity from the levy o....
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....e assessee had surrendered the claim during assessment proceedings itself and therefore, it was on a better footing than the situations envisaged under section 155(18) of the Act and was entitled to immunity from levy of penalty under section 270A(2) of the Act. He further contended that while the AO noted misreporting of income by the assessee and levied penalty @200% of tax thereon in terms of section 40A(9) of the Act, the Ld. CIT(A) had categorized it as underreporting of income in terms of 270A(2) of the Act and directed AO to levy penalty accordingly, which he contended was beyond the powers of the Ld. CIT(A). 6. Ld. DR on the other hand, vehemently relied on the order of the Ld. CIT(A). 7. We have heard both the parties and we ....
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....year commencing on 1st April 2021, i.e. from 01-04-22 onwards, when the retrospective amendment was brought on the statute. Thus alongwith introducing provisions disallowing claim of education cess retrospectively, provisions empowering AO's to rectify such claims allowed earlier was also introduced giving four years time from the introduction of the amendment to rectify such claims allowed earlier. The provisions of section 155(18) are reproduced hereunder for clarity: "(18) Where any deduction in respect of any surcharge or cess, which is not allowable as deduction under section 40, has been claimed and allowed in the case of an assessee in any previous year, such claim shall be deemed to be under-reported income of the assessee ....
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....rlier by assesses to be bonafidely made, considering the prevailing position of law and therefore offering them a safe passage from the levy of penalty by allowing declaration of such claims to taxation after the amendment was brought on statute. The said proviso, in effect, excluded claims of education cess which were effected by the retrospective amendment from being deemed underreported incomes, if subsequently surrendered by assesses. The date by which the said claim was to be surrendered was 31-03-2023, as noted by the Ld. CIT(A) at para 5.4 of his order. 11. In the facts of the case before us, the assesses claim of education cess was disallowable on account of the retrospective effect of the amendment to section 40(a)(ii) of the Ac....