No Misreporting, No Penalty: ITAT Deletes ₹7.40 Crore Levy u/s 270A on Gujarat Energy Development Agency [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has deleted the penalty of ₹7.40 crore imposed on Gujarat Energy Development Agency under Section 270A, holding that the assessee did not misreport income.

The Gujarat Energy Development Agency (GEDA), a registered charitable trust, faced a penalty of ₹7.40 crore under Section 270A of the Income Tax Act, 1961, for alleged misreporting of income in Assessment Year 2017-18.

The penalty was levied at 200% of the underreported income, citing purported misreporting in connection with deductions claimed for impairment of assets and abnormal loss.

In an appeal before the ITAT, the assessee contended that all deductions were supported by records, including certificates from statutory auditors and approvals from the Ministry of New & Renewable Energy for decommissioning non-functional wind turbines.

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The assessee’s counsel argued that no misreporting of income had occurred, and the Assessing Officer had failed to specify which particular limb under Section 270A(9) applied, as required by law.

The Revenue counsel contended that the assessee had under-reported income; however, the ITAT found no evidence of misrepresentation, suppression of facts, false entries, or unsubstantiated claims in the books of account.

The tribunal emphasised that Section 270A(9) clearly enumerates specific instances constituting misreporting, none of which applied to the present facts.

Given the absence of misreporting and the plausible explanations provided by the assessee for the claimed deductions, the two-member bench of Sanjay Garg (Judicial Member) and Narendra Prasad Sinha (Accountant Member) held that the penalty imposed under Section 270A was legally unsustainable.

The tribunal accordingly deleted the entire penalty of ₹7.40 crore, setting aside the orders of the Assessing Officer and the CIT(A).

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