TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 275
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....eclaring a total income of Rs. 70,11,00,620/-. b) The said return was processed under Section 143(1) of the IT Act, wherein an adjustment/disallowance of Rs. 26,72,885/- was made on account of the delayed payment of employees' contribution to Provident Fund (PF) and Employee State Insurance (ESI), under Section 36(1)(va) of the Act. This was vide an intimation dated 08.05.2020. c) Subsequently, a search and seizure action under Section 132 of the IT Act was conducted, and an assessment order under Section 143(3) read with Section 153A of the IT Act was passed on 17.08.2021. In this assessment order, the Assessing Officer merely reiterated the disallowance of Rs. 26,72,885/- under Section 36(1)(va) of the IT Act, which was already made in the intimation issued under Section 143(1) of the IT Act, alongside other additions. d) While the Commissioner of Income Tax (Appeals) deleted the addition of Rs. 26,72,885/- under Section 36(1)(va) of the IT Act, the Income Tax Appellate Tribunal (for short "ITAT"), vide order dated 31.05.2023, confirmed the disallowance of Rs. 26,72,885/- relying on the judgment of the Hon'ble Supreme Court in the case of Checkm....
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....issue. This clearly shows that the issue is a debatable. d) He further pointed out that the adjustment for the PF/ESI disallowance was already made while processing the return under Section 143(1)(a) of the IT Act. Therefore, as per the computation mechanism under Section 270A(2)(a) read with Section 270A(3) of the IT Act, there is no "under-reported income" because the assessed income does not exceed the income determined in the intimation under Section 143(1)(a). e) Lastly, he argued that the Petitioner's case is squarely covered by the exception under Section 270A(6)(a) of the IT Act, as all material facts were fully disclosed and the explanation offered was bona fide. He emphasised that merely because an addition is made or sustained, it does not mean that penalty is inevitable. f) In support of his contentions, he relied upon the following decisions in the cases of CIT v. Reliance Petroproducts (P.) Ltd. - [2010] 322 ITR 158 (SC), CIT v. Gurdaspur Co-operative Sugar Mills Ltd.- [2024] 461 ITR 208 (SC), CIT v. Gurdaspur Cooperative Sugar Mills Ltd. - [2013] 354 ITR 27 (Punj. & Har.), CIT v. Nayan Builders & Developers - [2014] 368 ITR 722 (Bombay)....
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....hief Commissioner or Principal Commissioner or Commissioner shall not revise any order under this section in the following cases- (a) where an appeal against the order lies to the Deputy Commissioner (Appeals) or to the Joint Commissioner (Appeals) o] the Commissioner (Appeals) or to the Appellate Tribunal but has not been made and the time within which such appeal may be made has not expired, or, in the case of an appeal to the Joint Commissioner (Appeals) or the Commissioner (Appeals) or to the Appellate Tribunal, the assessee has not waived his right of appeal; or (b) where the order is pending on an appeal before the Deputy Commissioner (Appeals); or (c) where the order has been made the subject of an appeal to the Joint Commissioner (Appeals) or the Commissioner (Appeals) or to the Appellate Tribunal." 9. The provisions of Section 264 are wide enough to include "any order" passed by an authority subordinate to the Principal Commissioner. The penalty order passed under Section 270A of the IT Act is an order passed under the Act, and therefore, the same can be revised under Section 264 of the Act. Further, the legislature itself, under Section 264(4....
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....f Kuldip Kaur Trust v. ITO [2025] 171 taxmann.com 620 (Bombay) dated 10-02-2025] and Aafreen Fatima Fazal Abbas Sayed v. Asstt. CIT [2021] 127 taxmann.com 819 (Bombay)/[2021] 280 Taxman 429 (Bombay)/[2021] 434 ITR 504 (Bombay) has consistently held that the Revisional Authority under Section 264 cannot refuse to exercise its revisional jurisdiction on the ground that order impugned was appealable before the appellate authority." 11. Having held that the order under Section 270A of the IT Act could be revised under Section 264 of the IT Act, we find that Respondent No. 1 erred in not exercising the discretion vested in him under Section 264 of the IT Act. It is consistently held by this Court that the powers conferred under Section 264 are very wide. Section 264(1) empowers the Commissioner to pass such order as he thinks fit. Such order, of course, cannot be prejudicial to the Assessee. Thus, the powers of the Commissioner are expressed in very wide terms. Respondent No. 1 was duty-bound to examine the merits of the penalty levied. This Court in Pramod R. Agrawal v. Principal Commissioner of Income-tax [2023] 156 taxmann.com 126 (Bombay), has held in paragraph 11 as under: ....
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....ovisions. Clause (c) of subsection (1) of section 271 categorically states that the penalty would be leviable if the assessee conceals the particulars of his income or furnishes inaccurate particulars thereof. By reason of such concealment or furnishing of inaccurate particulars alone, the assessee does not ipso facto become liable for penalty. Imposition of penalty is not automatic. Levy of penalty not only is discretionary in nature but such discretion is required to be exercised on the part of the Assessing Officer keeping the relevant factors in mind. Some of those factors apart from being inherent in the nature of penalty proceedings as has been noticed in some of the decisions of this Court, inheres on the face of the statutory provisions. Penalty proceedings are not to be initiated, as has been noticed by the Wanchoo Committee, only to harass the assessee. The approach of the Assessing Officer in this behalf must be fair and objective." (emphasis supplied) 14. Very recently, the Hon'ble Supreme Court in the case of K. Krishnamurthy (supra), in the context of Section 271AAA of the IT Act, has, in paragraphs 30 and 31, held thus: "30. This Court is of ....
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....he income determined in the return processed under clause (a) of sub-section (1) of section 143;" 17. Thus, Section 270A(2)(a) provides that a person shall be considered to have under-reported his income if the income assessed is greater than the income determined in the return processed under clause (a) of sub-section (1) of Section 143. It is undisputed that in the present case, other clauses of Section 270A(2) of the Act do not apply. 18. Further, relevant extract of Section 270A(3) stipulates that: "(3) The amount of under-reported income shall be,- (i) in a case where income has been assessed for the first time,- (a) if return has been furnished, the difference between the amount of income assessed and the amount of income determined under clause (a) of sub-section (1) of section 143;" 19. Thus, Section 270A(3)(i)(a) quantifies the under-reported income as the difference between the amount of income assessed and the amount of income determined under Section 143(1)(a). It is undisputed that in the present case, other clauses of Section 270A(3) of the IT Act do not apply 20. The present case does not fall within the ambit of the above-refer....
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....onsequently, we do not find that the order of the Tribunal gives rise to any substantial question of law for the opinion of this court." 23. When the above matter was carried to the Hon'ble Supreme Court in CIT vs. Gurdaspur Cooperative Sugar Mills (P.) Ltd. (supra), the Revenue categorically held that the correct position in law has been stated by the High Court. The relevant paragraph in this regard is as under: "1. Mr. N Venkatraman, learned Additional Solicitor General, has in his usual fairness stated the correct position of law as it exists in the facts and circumstances of the case. Taking note of the legal position, the Special Leave Petitions are dismissed." 24. Lastly, this Court in CIT v. Nayan Builders & Developers (supra) has held thus: "1. Having heard Mr Ahuja, learned counsel appearing on behalf of the appellant, we find that this appeal cannot be entertained as it does not raise any substantial question of law. The imposition of penalty was found not to be justified and the appeal was allowed. As a proof that the penalty was debatable and arguable issue, the Tribunal referred to the order on the assessee's appeal in quantum proceedin....
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....resent case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word "inaccurate" has been defined as : - "not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript." We have already seen the meaning of the word "particulars" in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars. 10. It was tried to be suggested t....