TaxTMI 
TaxTMI 
2026 (9) TMI 1710
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....he penalty of 39,05,763 levied by the Ld Assessing Officer under section 270A of the Income tax Act, 1961, without even recording any such evidence that proves malafide on the part of the appellant being a Government Company. 2. The learned CIT(A) erred in law as well as in facts in holding that the income declared in the income tax return filed in response to notice under section 148 constitutes under reported income u/s 270A(2)(b) r.w.s 270A(3)(i)(b), despite of the fact that the same returned income was accepted in full and no addition was made in the assessment order passed under section 147 of the Income tax Act, 1961. 3. The learned CIT(A) erred in law as well as in facts in confirming the levy of penalty under section 270A, only on the basis that the appellant has not filed the income tax return under section 139(1), ignoring the fact that the appellant has no malicious intention as the due taxes on the income were already paid and the appellant had already applied before the same Department for condonation of delay in filing the income tax return. 4. That the penalty order passed under section 270A is arbitrary, unjustified, bad in law, and liable....
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....527 computed on the returned income treated as under reported income. The operative finding in paragraph 3.5 of the penalty order reads as under: "In the instant case, for the year under consideration return is first time filed in response to notice u/s 148 of the Income tax Act and assessed income is greater than the maximum amount not chargeable to tax and hence assessee's assessed income is under-reported income within the meaning of section 270A(3)(i)(b)(B) of the Income tax Act. Hence, assessee has failed to furnish a bona fide explanation to show cause notice u/s 270A of the Income tax Act, 1961." 6. The learned CIT(A) dismissed the appeal by the impugned order dated 05.01.2026, holding in paragraph 5.3 thereof as under: "As per the clear provisions of section 270A(2)(b) read with section 270A(3)(i)(b), where no return of income is furnished under section 139 and the return is filed for the first time under section 148, and the assessed income exceeds the maximum amount not chargeable to tax, the same squarely falls within the definition of "under-reported income". The section operates automatically on fulfillment of statutory conditions and does not requ....
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....did not file its return under section 139(1) of the Act; it filed the return within 28 days of the notice under section 148 of the Act; the assessment was framed at the returned figure without any addition; and the tax with interest was paid. The sole basis of the penalty is that the return was furnished for the first time under section 148 of the Act. 11. The relevant parts of section 270A of the Act read as under: "(1) The Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner may, during the course of any proceedings under this Act, direct that any person who has under-reported his income shall be liable to pay a penalty in addition to tax, if any, on the under-reported income. (2) A person shall be considered to have under-reported his income, if - ... (b) the income assessed is greater than the maximum amount not chargeable to tax, where no return of income has been furnished or where return has been furnished for the first time under section 148; ... (6) The under-reported income, for the purposes of this section, shall not include the following, namely: - (a) the amount of income in respec....
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....tion 148A of the Act and has never been found to be false. The application under section 119(2)(b) of the Act was not disposed of, leaving the assessee without any means of putting its income on record until the notice under section 148 of the Act was issued, and it then filed the return within 28 days. Every figure in that return was verified by the AO against the information available with the Department and was found to tally. The tax was paid with interest and was substantially covered by tax deducted at source. On these facts it cannot be held that the assessee withheld anything from the Revenue. 15. The position of a Government company whose compliance is delayed by the audit conducted at the instance of the Comptroller and Auditor General of India has been considered by the Coordinate Bench of this Tribunal in Giral Lignite Power Ltd. (Supra) order dated 18.03.2019, where it was held in paragraph 7 as under: "... wherein the Co-ordinate Bench has held that where there is a delay in completion of statutory audit, there exist a reasonable cause for the delay in completion of tax audit and issuance of tax audit report. The ratio of the said decision equally applies ....