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Judgment
PER NAVEEN CHANDRA [A. M]:
The above captioned appeal is preferred by the assessee against the order dated 16.07.2025, passed by National Faceless Appeal Centre/Learned Commissioner of Income Tax(Appeals), New Delhi (hereinafter referred to as ‘ld. CIT(A)), under section 250 of the Income Tax Act, 1961 [hereinafter referred to as, “Act”] for Assessment Year 2019-20. The assessment order in this appeal is passed by the Assessing Officer [for short, AO] under section 270A of the Act.
The assessee has raised following grounds of appeal:-
1.That the learned CIT(A)(NFAC) has erred in law and on facts in upholding the penalty of 2,18,21,988/-w/s 270A even though the returned income of 73,10,34,680/- was fully accepted in the assessment order u/s 147 without any additions OR variations.
2.That the learned CIT(A) has erred in not granting immunity under section 270A(6)(a) despite the fact that (i) the assessee had disclosed all material facts, (i) taxes aggregating to more than 99% were already deducted/paid, and (iii) a condonation request was filed prior to issuance of notice u/s 148.
3.That the authorities below erred in treating the assessee's case as "under-reporting" u/s 270A(2)(b) merely on the ground that the return was filed in response to notice u/s 148, ignoring that the assessee had already discharged substantial tax liability and moved condonation application under section 119(2)(b) before issuance of notice u/s 148.
4.That the learned authorities erred in sustaining penalty at 200% for "misreporting" without specifying which of the clauses (a) to (f) of section 270A(9) was attracted, thereby rendering the order vague, non-speaking, and in violation of principles of natural justice.
5.That the impugned order suffers from disregard of binding precedents holding that penalty cannot be levied where the income declared is accepted without variation and where the disclosure is bona fide.
6.That the learned CIT(A) has erred in not appreciating that penalty provisions being quasi-criminal in nature require proof of deliberate concealment OR contumacious conduct. The assessee being a salaried employee with tax already deducted at source had no motive to conceal OR misreport income, and non-filing of return was on account of bona fide circumstances including COVID-related health issues in the family.
7.That the Ld. CIT(A) erred in law and on facts in confirming the penalty of Rs. 2,18,21,988/- under section 270A, that the penalty order was bad in law as adequate opportunity of hearing was not afforded and the penalty was sustained on grounds not specifically put to the assessee in show cause notice, contrary to settled judicial principles.
The sole issue involved in this case is penalty levied under section 270A, which was confirmed by the ld. CIT(A).
It is stated by the ld. Counsel for the assessee that the assessee could not file return u/s 139(1) for which the assessee filed a condonation petition u/s 119(2)(b) before the notice under section 148 was issued for Assessment Year 2019-20. Upon issuance of the notice u/s 148, the assessee filed return of Rs.3,10,34,680/- comprising income from salary, loss from house property and income from other sources. His return of income was accepted by the AO vide order u/s 147/144B dated 10.01.2024. Thereafter, the ld. Counsel for the assessee stated the penalty was initiated in the assessment order and a penalty under section 270A of the Act was levied for under reporting in consequent to misreporting.
It is say of the ld. AR that the penalty under section 270A has been levied only on the ground that the assessee did not file return under section 139(1) of the Act and filed the ITR only after issuance of notice under section 148 of the Act. The income as per return of income filed under section 148 of the Act of Rs.3,10,34,680/- has been accepted by the Assessing Officer but the penalty is initiated for under reporting and the penalty has been levied @200% of the tax payable by the assessee. The ld. Counsel for the assessee emphasized that the AO has not specified which of the clause (a) to (f) of section 270A(9) was attracted. The ld. Counsel further stated that the assessee is a salaried employee where tax has already been deducted at source and there is no motive to under report or misreport income and non-filing was on account of bonafide circumstances including covid related health issues in family.
Per contra, ld. Departmental Representative relied upon the orders of the Assessing Officer and ld. CIT(A).
We have heard the rival submissions and perused the material available on record. We find that the assessee is a salaried employee from whose salary TDS has already been deducted. Further, we find that the Assessing Officer has not specified in the notice, the specific clause of section 270A which is being invoked, for levying penalty of the assessee which is a fatal error vitiating the entire penalty order.
We are of the considered view that the Assessing Officer’s argument that the assessee’s conduct requires that the penalty under section 270A be levied as the assessee had filed return filed only after issuance of notice 148 of the Act, is not valid. We find that tax has not been evaded or avoided as TDS has already been deducted and State exchequer was compensated. Further, the income as per return under section 148 was duly considered and accepted by the AO. We are of the view that the AO has failed to establish that there is a false claim and that there is any underreporting of income or there is any misreporting of income by the assessee. Following the decision in the case of Reliance Petro Produts P. Ltd. (2010) 322 ITR 158(SC), we allow the assessee’s appeal and delete the penalty levied.
In the result, the appeal of the assessee in ITA No.5595/Del/2025 is allowed.