Income Tax Appellate Tribunal - Chennai
Vijaya Ranga Shanmuga Gengavan ... vs Ito, Ncc-10(1), Chennai on 5 May, 2026
आयकर अपीलीय अधिकरण, 'बी' न्यायपीठ, चेन्नई
IN THE INCOME TAX APPELLATE TRIBUNAL
'B' BENCH, CHENNAI
श्री एस एस विश्वनेत्र रवि, न्याविक सदस्य एवं श्री एस. आर. रघुनाथा, लेखा सदस्य के समक्ष
BEFORE SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER AND
SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER
आयकर अपील सं./ITA No.3842/Chny/2025
ननिाारण वर्ा / Assessment Year: 2023-24
Vijaya Ranga Shanmuga The Income Tax Officer
Gengavan Jeyakumar vs. Non-Corporate Circle 10(1)
No.D-73, CMDA Truck Terminal Chennai.
Ponniammanmedu Post
Ponniammanmedu S.O.
Tiruvallur - 600 110.
[PAN: ACUPJ1992N]
(अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent)
अपीलार्थी की ओर से/Appellant by : Shri. Y.Sridhar, FCA
प्रत्यर्थी की ओर से/Respondent by : Ms.Gouthami Manivasagam, Addl.CIT
सुनवाई की तारीख/Date of Hearing : 18.02.2026
घोर्णा की तारीख/Date of Pronouncement : 05.05.2026
आदे श /O R D E R
PER S. R. RAGHUNATHA, AM :
The present appeal is filed by the assessee against the order dated 17.11.2025 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as "ld.CIT(A)"), dismissing the appeal filed by the assessee against the penalty order dated 17.09.2025 passed u/s.270A of the Income Tax Act, 1961 :-2-: ITA. No.:3842/Chny/2025 (hereinafter referred to as the "Act"), pertaining to Assessment Year (A.Y.) 2023-24
2. The brief facts of the case emanating from the records are that the assessee is an individual engaged in the business of fuel retailing, lorry transport and related services. For the year under consideration, the assessee filed the return of income admitting a total income of Rs.28,58,240/-. The case was selected scrutiny and assessment was completed u/s.143(3) r.w.s 144B of the Act on 04.03.2025 determining total income at Rs.48,13,340/- after making disallowances of Rs.6,82,388/- towards freebies and Rs.12,72,710/- relating to hiring and earth-filling expenses and R&D expenses u/s.40(a)(ia) of the Act.
3. Subsequently, the assessee paid the demand raised on 25.03.2025 as per assessment order and demand notice dated 04.03.2025 within 30 days of the order, and applied for immunity u/s.270AA of the Act on 22.05.2025 by filing Form 68 for immunity against levy of penalty which was rejected by the concerned jurisdictional Assessing Officer on 18.06.2025, since the application has been filed beyond 30 days. The concerned jurisdictional Assessing Officer did not grant immunity u/s.270AA of the Act on the ground that the Form 68 was filed with delay. In the meantime, consequent to the assessment order, the penalty proceedings u/s.270A was initiated for under-reporting of income. The assessee submitted to the Assessing Officer about the immunity application pending for disposal. However, the Assessing Officer noted that the immunity was not granted and therefore, the assessee cannot claim immunity. He further noted that the assessee failed to substantiate the TDS pertaining to the expenses claimed u/s.40(a)(ia) of the Act. While stating so, the Assessing Officer levied penalty of Rs.3,06,495/- was levied @ 50% of tax allegedly sought to be evaded vide penalty order dated 17.09.2025 u/s.270A of the Act.
4. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the ld.CIT(A). The ld.CIT(A) vide order dated 17.11.2025 sustained penalty levied on freebies and deleted the penalty levied on disallowance u/s.40(a)(ia) of the Act.
:-3-: ITA. No.:3842/Chny/2025
5. Before the ld.CIT(A), the assessee submitted that penalty u/s.270A of the Act is not automatic and that as per the assessment order, the demand was nil. Subsequently, by way of revision order u/s.154 of the Act, a revised demand notice was issued upon the assessee which was discharged by paying the demand raised in the revised demand notice. The assessee also submitted that the immunity u/s.270AA was rejected solely on procedural defect, being the delay in filing Form 68. In making these submissions, the assessee requested the ld.CIT(A) to delete the penalty levied. The ld.CIT(A), deleted the penalty in respect of disallowance u/s.40(i)(ia) of the Act while stating that the genuineness of the expenses is not under dispute. However, the penalty in respect of the freebies was sustained for the reason that the assessee was unable provide relevant details to prove the genuineness of expenditure and that the assessee had not proved that the expenditure has been incurred wholly and exclusively for the purpose of assessee's business. Accordingly, a giving effect order was passed on 12.12.2025 and the penalty recomputed for freebies stood at Rs.1,06,990/-.
6. Aggrieved by the order of the ld.CIT(A), the assessee is in appeal before us.
7. Before us, the ld.AR for assessee reiterated the submissions from lower authorities and further placed reliance on the decision of the Income Tax Appellate Tribunal, Jodhpur Bench in the case of Punam Kanwar Bhati V. ITO [ITA No.454/Jodh/2023], wherein the Tribunal decided the case in favour of assessee and held that since the demand was paid within 30 days and filing of form 68 was only a procedural aspect, the penalty was directed to be deleted. In view of the above, since the present facts of the case are identical the ld.AR prayed for deleting the penalty.
8. Per contra, the ld.DR argued that the assessee has failed to substantiate the expenditure claimed on account of freebies given to the tune of Rs.6,82,388/-, proving that the claim is nothing but bogus. The ld.DR also :-4-: ITA. No.:3842/Chny/2025 reiterated that the assessee has not preferred any appeal against the said addition and thus submitted that the penalty was rightly levied.
9. We have heard rival submissions, perused the materials on record and gone through the orders of the authorities along with the judicial precedents relied on. It is trite law that procedures are subservient to substantive law. We note that in this case, the assessee has already paid the demand within 30 days from date of assessment order (Tax paid on 25.03.2025). It was only form 68 that was filed with a delay on 22.05.2025, instead of 03.04.2025. The only ground on which the application for immunity u/s.270AA of the Act was rejected is a procedural lapse, namely, delay in filing Form No.68. However, there is plethora of cases holding that penalty cannot be levied, if an assessee has already paid the demand raised in the assessment within 30 days of the order and Form No.68 has been filed by the assessee, albeit belatedly. In Punam Kanwar Bhati (supra), the Jodhpur Bench of the Tribunal held that:
"Considering the nature of addition/disallowance are not in the nature of misreporting or misreporting income of the assessee and the assessee has paid the demand within 30 days and filed the required Form No.68 since that form being procedural nature we condone that aspect of the matter and direct the ld.AO to delete the penalty levied u/s.270A of the Act"
10. In the present facts and circumstances of the case and by respectfully following the above decision, we hold that the penalty levied u/s.270A of the Act, as sustained by the ld. CIT(A) in respect of freebies, amounting to Rs.1,06,990/-, is to be deleted. The other grounds are rendered academic in nature and hence not being adjudicated upon.
:-5-: ITA. No.:3842/Chny/2025
11. In the result, the appeal of the assessee is allowed.
Order pronounced in the court on 05th May, 2026 at Chennai.
Sd/- Sd/-
(एस एस विश्वनेत्र रवि) (एस. आर. रघुनाथा)
(S.S. VISWANETHRA RAVI) (S. R. RAGHUNATHA)
न्याविक सदस्य/Judicial Member लेखा सदस्य/Accountant Member
चेन्नई/Chennai,
ददनांक/Dated, the 05th May, 2026.
Devadas
आदे श की प्रदिदलदि अग्रेदिि/Copy to:
1. अिीलाथी/Appellant
2. प्रत्यथी/Respondent
3.आयकर आयुक्त/CIT- NFAC
4. दवभागीय प्रदिदनदि/DR
5. गार्ड फाईल/GF
DEVADAS Digitally
DEVADAS
signed by
GOPALANAC GOPALANACHARY
Date: 2026.05.11
HARY 14:43:22 +05'30'