My APA was signed after the assessment and I filed a modified return under s.92CD(1) offering a smaller figure. The officer has levied s.270A penalty on the pre-APA assessed income. Is there anything I can do about it now?
The Bombay High Court has granted ad-interim relief on exactly that grievance, finding force in the contention that penalty, if it lies at all, cannot be worked out on the pre-APA assessment order but must be worked out on the modified return filed under s.92CD(1). The penalty order was stayed and recovery restrained. It is an interim order only; the point has not been decided.
Decided by the High Court (B.P. Colabawalla J and Firdosh P. Pooniwalla J) on 2025-08-18, reported as Writ Petition No. 5437 of 2025, High Court of Judicature at Bombay, Civil Appellate Jurisdiction; reported as Man Truck & Bus India (P.) Ltd. v. AUID (2025) 307 Taxman 101 (Bom.). It bears on section 92CD(1), section 92CD(3), section 270A, section 143(3), section 144C(3) of the Income Tax Act 1961, in Penalty, Assessment & Scrutiny and Appeals matters.
There is no settled authority on the penalty base once an APA has displaced the assessed figure, and a s.270A demand computed on the old number is a large exposure. This order gives a practitioner something concrete to put before a court on an interim application, provided it is described for what it is.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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For assessment year 2017-18 the petitioner filed its return on 30 November 2017 declaring NIL income after adjusting brought forward loss of Rs. 17.14 crore. The case was taken up in scrutiny and an assessment order was passed on 24 June 2021 under s.143(3) read with s.144C(3) making a transfer pricing addition of Rs. 31.15 crore. The petitioner appealed to the Commissioner (Appeals) on 22 November 2021. An Advance Pricing Agreement was executed with the CBDT on 21 December 2021, on an application made on 26 March 2014. A modified return of income was filed under s.92CD(1) on 30 March 2022 offering Rs. 14.16 crore on account of the transfer pricing adjustment as per the APA. Penalty under s.270A was imposed by order dated 24 March 2025, computed on Rs. 39.15 crore rather than on Rs. 14.16 crore. The petitioner contended that no assessment order under s.92CD(3) had been passed on the modified return by 31 March 2023, so that the modified return had become final and deemed to be accepted and no penalty could be levied; that in any event the penalty base was wrong; and that a virtual hearing had not been granted before the penalty order was passed.
This is an ad-interim order and not a final judgment. The Court found some force in the argument that even assuming penalty proceedings would lie, they could not be on the basis of the final assessment order passed on 24 June 2021 but on the basis of the modified return of income filed on 30 March 2022 (para 8), and that a prima facie case was made out for staying the demand under the penalty order dated 24 March 2025 (para 8). By way of ad-interim relief the Court stayed the operation of the penalty order dated 24 March 2025 and directed that no further action, including recovery of the penalty, be taken (para 9). The petition was stood over to 9 September 2025 for ad-interim relief, with liberty to dispose of it at that stage if time permitted.
The Court did not decide the s.92CD(3) deeming point. Its prima facie view rested on the simpler proposition that once a modified return has been filed under s.92CD(1) to give effect to an APA, that return, and not the superseded assessment, is the document against which any under-reporting or misreporting must be measured. Coupled with the size of the gap between the two figures, that was enough to make out a prima facie case for a stay and to justify restraining recovery pending the hearing.
a prima facie case is made out for staying the demand under the penalty order dated 24th March 2025
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Handle my notice → Ask a CA on WhatsAppThe Bombay High Court has granted ad-interim relief on exactly that grievance, finding force in the contention that penalty, if it lies at all, cannot be worked out on the pre-APA assessment order but must be worked out on the modified return filed under s.92CD(1). The penalty order was stayed and recovery restrained. It is an interim order only; the point has not been decided. This was decided by the High Court (B.P. Colabawalla J and Firdosh P. Pooniwalla J) and bears on section 92CD(1), section 92CD(3), section 270A, section 143(3), section 144C(3) of the Income Tax Act 1961. It is reported as Writ Petition No. 5437 of 2025, High Court of Judicature at Bombay, Civil Appellate Jurisdiction; reported as Man Truck & Bus India (P.) Ltd. v. AUID (2025) 307 Taxman 101 (Bom.). There is no settled authority on the penalty base once an APA has displaced the assessed figure, and a s.270A demand computed on the old number is a large exposure. This order gives a practitioner something concrete to put before a court on an interim application, provided it is described for what it is. If it applies to you, the first step is this: Check first whether any order under s.92CD(3) was passed on the modified return within the statutory period; if none was, take the point that the modified return has become final and deemed accepted.
For assessment year 2017-18 the petitioner filed its return on 30 November 2017 declaring NIL income after adjusting brought forward loss of Rs. 17.14 crore. The case was taken up in scrutiny and an assessment order was passed on 24 June 2021 under s.143(3) read with s.144C(3) making a transfer pricing addition of Rs. 31.15 crore. The petitioner appealed to the Commissioner (Appeals) on 22 November 2021. An Advance Pricing Agreement was executed with the CBDT on 21 December 2021, on an application made on 26 March 2014. A modified return of income was filed under s.92CD(1) on 30 March 2022 offering Rs. 14.16 crore on account of the transfer pricing adjustment as per the APA. Penalty under s.270A was imposed by order dated 24 March 2025, computed on Rs. 39.15 crore rather than on Rs. 14.16 crore. The petitioner contended that no assessment order under s.92CD(3) had been passed on the modified return by 31 March 2023, so that the modified return had become final and deemed to be accepted and no penalty could be levied; that in any event the penalty base was wrong; and that a virtual hearing had not been granted before the penalty order was passed. The matter was decided on 2025-08-18 by the High Court (B.P. Colabawalla J and Firdosh P. Pooniwalla J). On those facts the High Court held as follows. This is an ad-interim order and not a final judgment. The Court found some force in the argument that even assuming penalty proceedings would lie, they could not be on the basis of the final assessment order passed on 24 June 2021 but on the basis of the modified return of income filed on 30 March 2022 (para 8), and that a prima facie case was made out for staying the demand under the penalty order dated 24 March 2025 (para 8). By way of ad-interim relief the Court stayed the operation of the penalty order dated 24 March 2025 and directed that no further action, including recovery of the penalty, be taken (para 9). The petition was stood over to 9 September 2025 for ad-interim relief, with liberty to dispose of it at that stage if time permitted.
The Court did not decide the s.92CD(3) deeming point. Its prima facie view rested on the simpler proposition that once a modified return has been filed under s.92CD(1) to give effect to an APA, that return, and not the superseded assessment, is the document against which any under-reporting or misreporting must be measured. Coupled with the size of the gap between the two figures, that was enough to make out a prima facie case for a stay and to justify restraining recovery pending the hearing. In the words reproduced by the source cited on this page: "a prima facie case is made out for staying the demand under the penalty order dated 24th March 2025"
It was decided by the High Court on 2025-08-18 and is reported as Writ Petition No. 5437 of 2025, High Court of Judicature at Bombay, Civil Appellate Jurisdiction; reported as Man Truck & Bus India (P.) Ltd. v. AUID (2025) 307 Taxman 101 (Bom.). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 92CD(1), section 92CD(3), section 270A, section 143(3), section 144C(3), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. This is an ad-interim order and not a final judgment. The Court found some force in the argument that even assuming penalty proceedings would lie, they could not be on the basis of the final assessment order passed on 24 June 2021 but on the basis of the modified return of income filed on 30 March 2022 (para 8), and that a prima facie case was made out for staying the demand under the penalty order dated 24 March 2025 (para 8). By way of ad-interim relief the Court stayed the operation of the penalty order dated 24 March 2025 and directed that no further action, including recovery of the penalty, be taken (para 9). The petition was stood over to 9 September 2025 for ad-interim relief, with liberty to dispose of it at that stage if time permitted. It arises in Penalty, Assessment & Scrutiny and Appeals matters, on section 92CD(1), section 92CD(3), section 270A, section 143(3), section 144C(3) of the Income Tax Act 1961, and was decided by B.P. Colabawalla J and Firdosh P. Pooniwalla J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Work out the penalty on the figure in the modified return and put that arithmetic beside the officer's, so the difference between the two bases is on the face of the petition. If a hearing was sought before the penalty order and refused or ignored, plead that separately; it was pleaded here as an independent ground. Move for interim relief promptly and ask, as was granted here, for a stay of the operation of the penalty order together with a restraint on any further action including recovery. Cite this order as ad-interim only, and never as a holding on the penalty base.
Searched for later treatment; none was found. That is not the same as a source affirming it. This is an ad-interim order of 18 August 2025 and it decides nothing finally. The matter was to be taken up on 9 September 2025; no later order of the Bombay High Court in Writ Petition No. 5437 of 2025, and no decision of any court applying or doubting this order, was located. Before relying on it, check the current status of the petition. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Two figures in the order do not reconcile on the copy read. The assessment order dated 24 June 2021 is recorded as making a transfer pricing addition of Rs. 31.15 crore, but the penalty is recorded as having been computed on Rs. 39.15 crore. The order does not explain the difference and it could not be resolved from the document; the returned income was NIL after adjusting brought forward loss of Rs. 17.14 crore, which may or may not account for it. The reporter citation (2025) 307 Taxman 101 (Bom.) was taken from a case-digest index entry and not from the face of the order; verify it before citing. The discovery record listed s.92CD(5) among the sections in issue, which could not be confirmed from the order. The order is ad-interim and the discovery record was right to say so; nothing in it can be cited as a holding on the penalty base, on s.92CD(3), or on the hearing point. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
This is an ad-interim order and not a final judgment. The Court found some force in the argument that even assuming penalty proceedings would lie, they could not be on the basis of the final assessment order passed on 24 June 2021 but on the basis of the modified return of income filed on 30 March 2022 (para 8), and that a prima facie case was made out for staying the demand under the penalty order dated 24 March 2025 (para 8). By way of ad-interim relief the Court stayed the operation of the penalty order dated 24 March 2025 and directed that no further action, including recovery of the penalty, be taken (para 9). The petition was stood over to 9 September 2025 for ad-interim relief, with liberty to dispose of it at that stage if time permitted.
TaxSphere, “Man Truck & Bus India P. Ltd. v Assessment Unit”, https://taxnotice.vittsphere.com/caselaw/case/man-truck-bus-india-270a-penalty-base-after-a-92cd-modified-return-ad-interim/ (validity last checked 2026-09-16)
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You signed an APA and filed a modified return under s.92CD. The Commissioner has now issued a s.263 notice on the old assessment order. Can he?
I signed an APA with rollback and filed a modified return under s.92CD offering additional income. The officer says the proviso to s.92C(4) bars any Chapter III deduction on that extra income. Is he right?
The Assessing Officer has served a final assessment order on our foreign company raising a transfer pricing addition, without ever serving a draft order. Was he obliged to serve one first, and what was I supposed to do with it if he had?
We received a draft order on 12 March. Nobody objected. When was the final order due, and if we had objected, by when must the Dispute Resolution Panel have issued its directions and by when must the officer have given effect to them?
