Penninti Vivekananda Rao Vs ADIT (ITAT Hyderabad)
This appeal concerned the levy of penalty under section 270A of the Income Tax Act, 1961 for Assessment Year 2020–21. The assessee, a non-resident individual, filed his return declaring total income of ₹5.20 crore, including capital gains and income from other sources. A significant portion of the capital gains related to the surrender of three Bajaj Equity Plus Fund policies. During scrutiny, the Assessing Officer held that the gains from surrender of these funds were taxable under the head “Income from Other Sources” instead of “Capital Gains” as declared by the assessee. On this basis, penalty proceedings under section 270A were initiated for alleged misreporting of income. The assessee’s request for immunity under section 270AA was rejected, and a penalty of ₹2.48 crore was levied.
The Commissioner (Appeals) upheld the penalty, leading to the present appeal before the Tribunal. The assessee contended that there was no misreporting within the meaning of section 270A(9) because all facts were fully and truly disclosed in the return of income. The dispute, according to the assessee, was only about the correct head of income under which the surrendered fund amount was taxable. The assessee argued that offering income under an incorrect head, based on a bona fide belief, did not amount to misrepresentation or suppression of facts and therefore could not attract penalty for misreporting.
