Aavas Financiers Limited vs. Income Tax Department

Parties Involved

Facts Summary

The assessee, Aavas Financiers Limited, a housing finance company, filed its return of income on 31.10.2018 declaring total income of Rs 87,03,64,490. The tax audit report disclosed that employees’ contribution to provident fund of Rs 11,99,333 was deposited on 16.06.2017 as against the due date of 15.06.2017. The Assessing Officer (AO) completed the assessment under section 143(3) read with sections 143(3A) and 143(3B) of the Act on 03.03.2021 at Rs 88,59,65,674 and initiated penalty proceedings under section 270A of the Act for under reporting of income on both the additions made. The assessee explained that the delay was of one day only and was caused by the provident fund portal not working on the due date. The AO rejected the explanation on the ground that the assessee could have deposited the contribution well before the due date. The assessee submitted that the delay was reported in clause 20 of the tax audit report and the Centralised Processing Centre had already disallowed Rs 13,45,588 under section 36(1)(va) of the Act while processing the return under section 143(1) of the Act. The AO levied penalty of Rs 2,07,484, being 50% of the tax payable on the under reported income of Rs 11,99,333. The learned Commissioner of Income Tax (Appeals) confirmed the penalty. The assessee appealed against the order of the learned CIT(A).…

Legal Issues

• 1. Whether the penalty imposed under section 270A of the Act is justified?
• 2. Whether the assessee under reported income?

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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