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Judgment
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
This appeal arises from order u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), dated 29.08.2025 passed by Ld. CIT(A)-NFAC. In this case, it is seen that the assessee had not filed his return of income for the year under consideration. The Ld. AO acted on information and reopened the case through issuance of notice u/s 148 of the Act. In response to this notice the assessee filed his returned of income declaring a total income of Rs.30,36,550/-. The Ld. AO accepted this return of income through assessment order u/s 147 r.w.s. 144B of the Act. However, the AO initiated penalty proceedings u/s 270A of the Act for under reporting of the income. Thereafter, the Ld. AO imposed a penalty of Rs.3,72,359/-, vide order dated 20.05.2025.
Aggrieved with this the assessee approached the CIT(A) where also he could not succeed on the reasoning that the assessee filed the return of income only when a notice u/s 148 was issued and thus, technically he had under-reported his income. Thereafter, the Ld. CIT(A) upheld the action of Ld. AO.
Further aggrieved the assessee has filed the present appeal with the following grounds: -
“1.The impugned Penalty order dated 29.08.2025 confirmed by CIT(Appeal) is arbitrary, against the facts & circumstances of the case.
2.That learned CIT(Appeal) has failed to consider the true facts & submissions made before him in the spirit of justice & has caused injustice to this individual appellant.
3.That learned CIT(Appeal) has tried to justify the action of assessing officer only without looking into the very important fact that assessment has been completed & Returned Income has been accepted in the assessment order passed u/s 147 r. w. s 144 B after detailed discussions made in order.
4.That learned lower authorities have failed to establish that in the impugned case income has been under reported because due to Covid -19 individual was stuck up with his old aged parents & when he got relived he has no option for filling his income tax return late other than in pursuance of notice issued u/s 148.
5.That this individual being a law abiding citizen has neither concealed his income nor has under reported his income in common parlance under reporting means "Reporting lower than what actual income is "while this individual has reported his income as Rs. 30,36,550.00 in return & in the assessment order Income assessed is Rs. 30,36,550.00. Therefore, it cannot be taken as "under reporting "of Income.
6.That learned C.I.T. (appeal) has taken the views of under reporting as close to provisions of section 271(2) (c') which are clearly distinguishable on the facts & circumstances of the case.
7.That learned lower authorities have done injustice to this individual appellant by not allowing the benefit as envisaged u/s 270AA which is clearly applicable in the case in question.
8.That the appellant craves the leave to add /or to amend / modify/ delete any grounds of appeal till the hearing of appeal.”
Before us the Ld. AR stated that the assessee was a regular tax payer and had only one source of income, being salary. It was stated that the entire quantum of income was subject to TDS and thereafter there was no tax liability as such. For the year under consideration, the assessee missed out on filing his return of income due to the ongoing COVID Pandemic and the resultant problems being faced by the assessee thereafter. It was the submission that though the filing of return was missed but at the first available opportunity the assessee filed his returned of income in response to notice u/s 148 of the Act. It was further pointed out that the entire quantum of income was accepted as such by the Ld. AO and no tax was determined as payable by the Ld. AO. It was argued that under such facts and circumstances there was no under-reporting of income since there was no enhancement made by the Ld. AO to the income returned in response to notice u/s 148 of the Act.
Per contra, the Ld. DR relied on the orders of the authorities below and supported the penalty levied.
We have considered the rival submissions and have gone through the records before us. What is evident is that though the assessee had not filed his return of income u/s 139 of the Act but the entire quantum of tax on such income was already subjected to TDS. Thereafter, it is seen, that the assessee filed his return of income in response to notice u/s 148 of the Act.Admittedly, the Ld. AO accepted this returned income. Even if the circumstance of the COVID Pandemic raging at that time is to be disregarded then also it is difficult to understand how the assessee has under-reported his income when no addition has been made by the Ld. AO and apparently no extra tax has been levied. For all these reasons the penalty levied is unsustainable and we direct that it should be deleted.
In the result, appeal is allowed.