Rajah Uma Vs DCIT (ITAT Chennai)
The assessee initially declared capital gains on sale of land and paid tax, but later filed a revised return claiming it as agricultural land (not a capital asset) based on distance criteria from municipal limits. The AO rejected the claim and levied penalty u/s 270A alleging misreporting of income.
Before the Tribunal, it was established that all facts were fully disclosed and the dispute was purely regarding whether the land was within or beyond 6 km-i.e., a factual and debatable issue.
The ITAT held that:
- There was no concealment or false reporting
- The assessee’s conduct showed bona fide belief (initial tax payment + revised claim)
- The AO failed to clearly establish whether penalty was for under-reporting or misreporting, as required under section 270A
The Tribunal emphasized that mere rejection of a claim does not amount to misreporting, especially where full disclosure is made.
Accordingly, the ITAT deleted the penalty of ₹5.59 lakh, holding it unsustainable in law and allowed the appeal.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This captioned Appeal filed by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, [CIT(A)] dated 21.10.2025 Assessment Year 2020-21 confirming penalty levied under section 270A of the Income Tax Act, 1961.
