Nature of the Event
Disclosure of a pending litigation/dispute pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, regarding an Income Tax penalty order.
Key Quantitative Figures
- Penalty Amount: ₹40,39,078
- Underlying Tax Amount: ₹20,19,539
- Arithmetical Error in Return: ₹58,84,439
- Corporate Tax Rate Applied in Order: 30%
- Company's Actual Tax Rate: 22%
Dates of Action
- Order Date: 21st September 2026
- Tax Payment Date for Rectified Income: 31st March 2026
- Notice Date (u/s 274): 27th March 2026
- Company's Reply Date: 20th April 2026
Parties Involved
- Opposing Party: Assessment Unit, Income Tax Department, NAFAC, Delhi
- Appellate Authority: Commissioner of Income Tax (Appeals), NAFAC, Delhi
Brief Details of Dispute
The Company received an order from the Assessment Unit, Income Tax Department, NAFAC, Delhi under Section 270A of the Income Tax Act, 1961 for Assessment Year 2024-2025. The order levies a penalty of ₹40,39,078, which is 200% of a tax amount of ₹20,19,539. The penalty is on account of alleged under-reporting of income due to mis-reporting of income.
The basis of the penalty is an arithmetical error in the return of income filed by the Company for the relevant assessment year, amounting to ₹58,84,439. This error was rectified during the assessment proceedings, and the income of ₹58,84,439 was offered to tax. The due tax on this income was paid by the Company on 31st March 2026.
In response to a notice dated 27th March 2026 issued under section 274 of the Act proposing to levy the penalty, the Company filed a detailed reply dated 20th April 2026. The reply justified that no penalty is leviable under the Act for mere arithmetical errors. The Assessment Unit passed the order ignoring this submission. The order also computed the penalty by applying a corporate tax rate of 30%, whereas the company is assessed to tax at 22%.
Expected Financial Implications & Next Steps
The Company states it will be moving a rectification petition for the correct quantification of the penalty. It will also prefer an appeal against the order dated 21st September 2026 before the Commissioner of Income Tax (Appeals), NAFAC, Delhi. The Company believes it has adequate factual and legal grounds to reasonably substantiate its position and expects the entire demand to subside. Accordingly, the Company states there is no material impact on its financial, operational, or other activities.