Income-tax penalty of Rs. 92,56,326 levied on a protective basis; company to contest before ITAT

EIH Ltd received an Income-tax penalty order under Section 271(1)(c) for AY 2016-17, levying Rs. 92,56,326.

Thu 1 Oct 2026

Income-tax Penalty Levied

Rs. 92,56,326

Assessment Year

AY 2016-17

Transfer Pricing Adjustment

Rs. 1.83 crore

Disallowance under Section 40(a)(i)

Rs. 0.84 crore

Financial Impact (as quantified)

Rs. 92.56 lakh

What the company disclosed

EIH Ltd has informed the exchanges that an order has been passed by the Income-tax Department under Section 271(1)(c) of the Income-tax Act, 1961 for Assessment Year 2016-17, levying a penalty of Rs. 92,56,326.

Why the penalty was levied

• The penalty pertains to additions and disallowances made during assessment proceedings.
• These are a Transfer Pricing Adjustment of Rs. 1.83 crore and a disallowance under Section 40(a)(i) amounting to Rs. 0.84 crore.

What the order itself records

• The appellate proceedings before the Commissioner of Income-tax (Appeals), or CIT(A), resulted in partial relief on both issues.
• The consequential appeal-effect order pursuant to the CIT(A) decision has not yet been passed by the jurisdictional Assessing Officer.
• Accordingly, the order notes that the penalty has been levied on a protective basis, based on the assessment position presently available, and is liable to be modified upon giving effect to the appellate order.

Where the matter stands

• The Company has already preferred further appeals before the Income Tax Appellate Tribunal in respect of the amounts and issues that continue to remain under dispute.
• It is also pursuing consequential appeal effect before the jurisdictional tax authorities pursuant to the relief granted by the CIT(A).
• The Company says it believes it has adequate grounds to contest the penalty order on merits and will continue to pursue the available appellate remedies.
• The Company states the order arises from tax adjustments and disallowances made during assessment proceedings and does not relate to concealment of income.

The amounts involved

• Penalty levied: Rs. 92,56,326.
• Transfer Pricing Adjustment: Rs. 1.83 crore.
• Disallowance under Section 40(a)(i): Rs. 0.84 crore.
• Financial impact of the order, as presently quantified by the Company: Rs. 92.56 lakh, which remains subject to modification pursuant to the consequential appeal-effect order and the outcome of the pending appellate proceedings.

How this may be read

A penalty order from the tax department is a development that can be perceived as a negative trigger. Two points in the disclosure shape that reading: the order itself says the penalty has been levied on a protective basis and is liable to be modified once appeal effect is given, and the Company is contesting the matter through pending appellate proceedings. The financial impact, as presently quantified by the Company, is Rs. 92.56 lakh.

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