Koshambh Multitred Pvt. Ltd. vs. Deputy Commissioner of Income Tax

Parties Involved

Facts Summary

In the assessment proceedings, the assessee claimed a deduction of education cess amounting to Rs. 15,94,943/-. Upon being confronted with the fact that the education cess was not allowable as a deduction due to a retrospective amendment made by the Finance Act, 2022, the assessee accepted the disallowance and the sum was added to the returned income. Penalty proceedings for misreporting of income were initiated under section 270A(9) of the Income Tax Act, 1961. The assessee argued that the issue of the education cess deduction was debatable and that it was only due to the retrospective amendment that the claim became statutorily disallowed. The assessee also contended that it had surrendered the claim during the assessment proceedings and had no intention of underreporting its income. However, the contentions were rejected, and a penalty was levied at 200% of the tax on the misreported income, amounting to Rs. 11,14,674/-.…

Legal Issues

• 1. Whether the penalty levied for underreporting of income due to the disallowance of education cess deduction is sustainable in law.
• 2. Whether the assessee is entitled to immunity from the levy of penalty under section 155(18) of the Act.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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