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IN THE INCOME TAX APPELLATE TRIBUNAL

AHMEDABAD “A” BENCH

Before: DR. BRR Kumar, Vice President

And Shri T. R. Senthil Kumar, Judicial Member

ITA No: 279/Ahd/2026

Assessment Years: 2016-17

Deputy Commissioner Unimed Technologies

of Income Tax, Limited

Circle-2(1)(1), Vs Baska Ujiti Road Baska

Vadodara Halol Dist: Panch

Mahal, Panch Mahals

389350, Gujarat, India

Vadodaras

PAN: AAACE4022B

(Appellant) (Respondent)

Assessee Represented: Shri Bandish Soparkar, A.R.

Revenue Represented: Shri Nitin Kulkarni, Sr. D.R.

Date of hearing : 26-02-2026

Date of pronouncement : 03-03-2026

आदेश/ORDER

PER: T.R. SENTHIL KUMAR, JUDICIAL MEMBER

This appeal is filed by the Revenue as against the appellate order

dated 29-11-2025 passed by the Commissioner of Income Tax

(Appeals), National Faceless Appeal Centre, Delhi, (in short referred to

as “CIT(A)”), confirming the levy of penalty under section 271(1)(c) of

the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating

to the Assessment Year 2016-17.

I.T.A No. 279/Ahd/2026 A.Y. 2016-17 2

DCIT Vs. Unimed Technologies Ltd.

2. Brief facts of the case is that the assessee is a company engaged in

the business of manufacturing and trading pharmaceutical products

and development of product technologies. For the Asst. Year 2016-17

regular assessment completed under section 143(3) of the Act on

29.12.2018 wherein various disallowances were made, including

consultancy fees, foreign exchange fluctuation loss, software

expenses, testing fees and interest capitalization. Based on these

additions, the assessed income was enhanced and penalty

proceedings u/s 271(1)(c) were initiated for furnishing inaccurate

particulars of income.

3. In the quantum appeal the Commissioner of Income Taх (Appeals),

vide order dated 08.02.2024, granted substantial relief by deleting

multiple additions and restricting the additions relating to

consultancy fees and foreign exchange fluctuation loss. It is

thereafter, the Assessing Officer issued a show-cause notice dated

27.03.2025 and initiated penalty proceedings. The assessee filed a

reply on 28.03.2025. However, the Ld AO levied penalty u/s. 271[1][c]

of Rs.1,61,42,867/- vide order dated 29.03.20 for furnishing

inaccurate particulars of income.

4. Aggrieved against the Penalty order, assessee company filed appeal

before Ld CIT[A] who deleted the penalty by observing as follows:

“… 5.3. In the quantum appeal, the Commissioner of Income Tax

(Appeals), NFAC, vide order No.ITBA/NFAC/S/250/2023-

24/1060679970(1) dated 08.02.2024, granted substantial relief to the

appellant. Out of the additions made by the Assessing Officer, the

CIT(A) deleted the disallowances relating to software expenses, testing

fees and interest capitalization. The CIT(A) partly restricted the

disallowance of consultancy fees to Rs.1,88,13,146/-, and restricted

I.T.A No. 279/Ahd/2026 A.Y. 2016-17 3

DCIT Vs. Unimed Technologies Ltd.

the disallowance of foreign exchange fluctuation loss to

Rs.2,78,31,758/-. Thus, a major portion of the assessed additions

forming the basis of the penalty did not survive in quantum

proceedings.

5.4 Since the major quantum additions forming the foundation of the

penalty have been deleted by the CIT(A), the penalty to that extent

cannot survive. Even for the sustained additions, namely consultancy

fees and foreign exchange fluctuation loss, the issues are highly

debatable, involving interpretation of accounting standards,

applicability of section 43A and determination of whether the

expenditure is capital or revenue. The appellant has consistently

disclosed complete particulars of such expenditure in its books,

financial statements, audit reports and during assessment

proceedings. There is no finding that the appellant concealed income

or furnished inaccurate particulars. Penalty provisions being penal in

nature require clear evidence of deliberate concealment or willful

furnishing of incorrect particulars, which is absent in the present

case.

5.5. The Hon'ble Supreme Court in CIT vs. Reliance Petroproducts

Pvt. Ltd. (2