JETSYNTHESYS PRIVATE LIMITED,PUNE V. DCIT, CIRCLE-7, PUNE, PUNE

ITA 346/PUN/2025

AI Insights

The case involves Jetsynthesys Private Limited, which appealed against a penalty imposed by the Assessing Officer for under-reporting of income due to misreporting, specifically related to delayed payments of Employees' PF and ESIC. The penalty was initially confirmed by the CIT(A)/NFAC but was contested at the Tribunal. The Tribunal's decision was influenced by the Supreme Court's precedent that disallowance of an expenditure claim, which was based on a debatable issue at the time of filing, does not constitute grounds for a penalty. The Tribunal set aside the CIT(A)'s order and directed the removal of the penalty.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785667 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 10-02-2025
• Other Referred Cases: Checkmate Services (P) Ltd. vs. CIT, CIT, Ahmedabad vs. Reliance Petroproducts (P.) Ltd., CIT, Central, Pune vs. Ghatge Patil Transport Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMNATH P. MURKUNDE
• Assessee Lawyers: SARVESH KHANDELWAL
• Keywords: Question of law
• Section: 143(3); 271(1)(c); 14A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.346/PUN/2025 िनधाᭅरण वषᭅ / Assessment Year : 2017-18 Jetsynthesys Private Limited, 101-104, 1st Floor, Metro House, Mangaldas Road, Pune- 411001. PAN : AAICM1358A Vs. DCIT, Circle-7, Pune. Appellant Respondent आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 19.12.2024 passed by Ld. CIT(A)/NFAC for the assessment year 2017-18. 2. The appellant has raised the following grounds of appeal :- “1. On facts and circumstances prevailing in the case and as per provisions of the Act it be held that the penalty imposed u/s 270A Assessee by : Shri Sarvesh Khandelwal Revenue by : Shri Ramnath P. Murkunde Date of hearing : 06.08.2025 Date of pronouncement : 30.10.2025 Printed from counselvise.com ITA No.346/PUN/2025 2 of the Act amounting to Rs. 2,74,100/- is not in accordance with the provisions of the Act. Just and proper relief be granted to the assessee. 2. On facts and circumstances prevailing in the case and as per the provisions of the Act, it be held that the assessing officer and CIT(A) erred in not identifying the Specific clause under Section 270A(9) for categorizing under-reporting as misreporting of income. Thus, order passed is without jurisdiction and bad in law. Just and proper relief be granted to the assessee. 3. The appellant prays to be allowed to add, amend, modify, rectify, delete, and raise any grounds of appeal at the time of hearing.” 3. Facts of the case, in brief, are that the assessee is a Private Limited Company filed its return of income on 22-11-2017 declaring a loss of Rs.(-) 26,35,89,143/-. Vide order dated 17-12-2019, assessment order u/s 143(3) of the Act was passed determining loss at Rs.(-)26,31,45,460/- as against the loss returned by the assessee at Rs.(-)26,35,89,143/-. The above assessed loss includes disallowance of Rs.4,43,505/- on account of delayed payment of Employees’ PF and ESIC. Vide order dated 13.02.2024 Assessing Officer also imposed penalty of Rs.2,74,100/- u/s 270A(9) of the Act for under-reporting of income in consequence of miss-reporting thereof. 4. The assessee preferred an appeal before the Ld. CIT(A)/NFAC against the quantum order as well as the penalty order. The Printed from counselvise.com ITA No.346/PUN/2025 3 assessee withdrew quantum appeal in the light of Hon’ble Apex Court’s order passed in the case of Checkmate Services (P) Ltd. vs. CIT, (2022) 143 taxmann.com 178 (SC). However, assessee contested penalty appeal & after considering the reply of the assessee, Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee & confirmed the penalty of Rs.2,74,100/- imposed u/s 270A(9) of the IT Act. It is this order against which the assessee is in appeal before this Tribunal. 5. Ld. AR appearing from side of the assessee submitted before us that the order passed by Ld. CIT(A)/NFAC is unjustified. Ld. AR submitted that the issue involved in the present case is an interpretational issue and question of law therefore question of imposition of penalty does not arise. Ld. AR submitted before the Bench that the assessee neither under-reported the income nor misreported the income. Ld. AR also submitted that at the time of preparation of books of accounts the issue of taxability of belated payment of employee’s PF and ESIC was debatable and various Hon’ble High Courts were of the view that the payment made before furnishing the return of income was allowable and the issue Printed from counselvise.com ITA No.346/PUN/2025 4 got settled in the year 2022 when Hon’ble Apex Court gave the decision in the case of Checkmate Services (P) Ltd. vs. CIT, (2022) 143 taxmann.com 178 (SC). Accordingly, Ld. AR submitted that admittedly the payment of employee’s PF and ESIC was made by the assessee and was rightly debited in the profit & loss account on the basis of law prevailing at the time of preparation of books of accounts. Ld. AR submitted that disallowance of any expenditure does not attract penalty. In support of this contention, Ld. AR relied on various judgements including judgement passed by Hon’ble Supreme Court in the case of CIT, Ahmedabad vs. Reliance Petroproducts (P.) Ltd. [2010] 189 Taxman 322 (SC), wherein under identical facts Hon’ble Court deleted the penalty u/s 271(1)(c) of the Act. Accordingly, Ld. AR requested before the bench to delete the penalty of Rs.2,74,100/- imposed u/s 270A(9) of the Act. 6. Ld. DR appearing from side of the Revenue relied on the orders passed by the subordinate authorities and requested to confirm the same. 7. We have heard Ld. counsels from both the sides and perused the material available on record including the paper book and copy Printed from counselvise.com ITA No.346/PUN/2025 5 of case laws filed by the assessee. In this regard, we find that the Assessing Officer disallowed the delayed payment of employee’s PF and ESIC of Rs.4,43,505/-. Admittedly, the assessee made the payment of employee’s PF and ESIC before furnishing the return of income and claimed the same in its books of accounts on the basis of judgements of various Hon’ble High Courts including that of Hon’ble Jurisdictional Bombay High Court passed in the case of CIT, Central, Pune vs. Ghatge Patil Transport Ltd. (2015) 53 taxmann.com 141 (Bombay). However, Ld. Assessing Officer vide order dated 13.02.2024 imposed penalty u/s 270A(9) of the Act on the basis of disallowance of expenditure claimed by the assessee and the penalty u/s 270A(9) of the Act was confirmed by Ld. CIT(A)/NFAC on the basis of judgement passed by Hon’ble Supreme Court in the case of Checkmate Services (P) Ltd. vs. CIT, (2022) 143 taxmann.com 178 (SC). It was the contention of Ld. AR of the assessee that the assessee neither under-reported any income nor misreported any income and therefore no penalty is imposable. In support of this contention, Ld. AR relied on judgement passed by Hon’ble Supreme Court in the case of CIT, Ahmedabad vs. Printed from counselvise.com ITA No.346/PUN/2025 6 Reliance Petroproducts (P.) Ltd. [2010] 189 Taxman 322 (SC) wherein Hon’ble Court deleted the penalty u/s 271(1)(c) of the Act by observing as under :- “10. It was tried to be suggested that section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form the part of the total income. It was, therefore, reiterated before us that the Assessing Officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the Return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c). If we accept the contention of the revenue then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature.” 8. Respectfully following the above judgement of Hon’ble Supreme Court in the case of CIT, Ahmedabad vs. Reliance Petroproducts (P.) Ltd. [2010] 189 Taxman 322 (SC), we find force in the arguments of Ld. AR of the assessee that the assessee has not Printed from counselvise.com ITA No.346/PUN/2025 7 under-reported or misreported any income. Considering the totality of the facts of the case and in the light of above judgment of Hon’ble Supreme Court passed in the case of CIT, Ahmedabad vs. Reliance Petroproducts (P.) Ltd. [2010] 189 Taxman 322 (SC), we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC and direct the Assessing Officer to delete the penalty of Rs.2,74,100/- imposed u/s 270A(9) of the Act. Thus, grounds raised by the assessee are allowed. 9. In the result, the appeal filed by the assessee is allowed. Order pronounced on this 30th day of October, 2025. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 30th October, 2025. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr.CIT concerned. 4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. Printed from counselvise.com "