@meenakshimishra if the reason for the undercalculation was a software bug, then yes, TT will pay penalties or interest.  You entered the data correctly, but the software didn't calculate correctly. 

HOWEVER, if the reaon for the undercalculation was an input error by the user, then NO, TT will NOT pay penalties interest.   The software worked correctly, but the data was entered incorrectly.

Why is the State asking for penalties and interest? what was wrong with the return? 

If TurboTax agrees they were in error under the 100% Accurate Calculation Guarantee, they supposedly will reimburse penalties and interest if notified within 30 days of your receipt of your letter/notice..

See this FAQ which also has a form to submit an online claim.  At the bottom of the FAQ are links to the "fine print" for the guarantees.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/intuit-account-billing/submit-claim-turb...

If you need to speak to TurboTax Support:

Good luck trying to prove that TurboTax did a miscalculation.

@meenakshimishra