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Judgment
ORDER
PER KRINWANT SAHAY AM
Appeal in this case has been filed by the assessee against the order passed by the Ld. CIT(A)/ NFAC vide order dated 25.11.2025 for the A.Y. 2023-24. The grounds of appeal are as under :-
1.That the impugned appellate order passed by the NFAC/Hon'ble CIT(A) is bad in law, void ab initio and liable to be quashed, being cryptic, non-speaking and passed in gross violation of section 250(6) of the Act.
2.That the NFAC/Hon'ble CIT(A) has erred in law and on facts in disposing of the appeal without granting the Appellant a reasonable opportunity of being heard, and in passing the impugned order in haste without issuance of any notice, thereby violating the principles of natural justice.
3.That on the facts and circumstances of the case and in law, the NFAC/Hon'ble CIT(A) has erred in upholding the levy of penalty under section 270A of the Act amounting to Rs. 2,73,980, without appreciating that -
a. Penalty under section 270A has been levied mechanically without recording any satisfaction as to how the case falls within the scope of 'misreporting of income".
b. Disallowance relating to late fee/TDS-related expenditure does not constitute misrepresentation or suppression of facts under clause (a) of section 270A(9), when all primary facts relating to the claim were duly disclosed during assessment proceedings.
c. Mere disallowance of an expenditure made during scrutiny assessment, even if accepted by the Appellant, does not ipso facto lead to the conclusion that there was misreporting of income, in the absence of any finding of deliberate misreporting.
4.That on the facts and circumstances of the case and in law, the NFAC/Hon'ble CIT(A) has erred in law in placing reliance on the rejection order for immunity under section 270AA of the Act to sustain the penalty under section 270A, ignoring the position that rejection of immunity does not automatically justify the levy of penalty.
5.The above grounds are without prejudice to each other and the Appellant craves leave to add, to amend, to delete and/or to modify all or any of the fore going ground(s) of appeal.
In the written submission alongwith appeal set filed by the Ld. Counsel for the assessee brought out that penalty in this case u/s.270A has been levied mechanically without recording any satisfaction as to how the case falls within the scope of ‘misreporting of income’. It has been further submitted that the disallowance relating late fee/TDS related expenditure does not constitute misrepresentation or suppression of facts under clause (a) of section 270A(9), when all primary facts relating to the claim were duly disclosed during assessment proceedings. Lastly, it was submitted that mere disallowance of an expenditure made during scrutiny assessment, even if accepted by the appellant does not ipso facto lead to the conclusion that there was misreporting of income, in the absence of any finding of deliberate misreporting.
Per contra the Ld. DR relied mostly on the orders of the authorities below.
We have considered the findings given by the authorities below and the arguments made by Ld. DR. We have also considered the submissions filed by the assessee alongwith the appeal set. We are of this considered view that mere disallowance during assessment proceedings of any expenditure does not constitute suppression of income. Therefore, the action of levying penalty u/s.270A made by the AO and its confirmation made by the ld. CIT(A) cannot be justified.
In the result, the appeal filed by the assessee on this issue is allowed.