Disallow expense under section 35d

This query is : Resolved

Mohit sachdeva (Querist)
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01 January 2025 i have received notice under section 270a for demand notice of penalty in regard to addition which made in appeal order. and we have refund which is on hold. my query regarding whether penalty can be levied or not???

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 January 2025 If the disallowance under Section 35D was due to a genuine mistake or a difference in interpretation of the law, the penalty might not be applicable.
If the disallowance is due to deliberate concealment of facts or willful misreporting, then penalty provisions can be invoked.
Regarding your refund being on hold, the penalty demand can still be processed separately. The tax authority can adjust your refund amount against the penalty, and until the penalty issue is resolved, the refund may be withheld or adjusted.