Natal Mary Pedru Rodrigues Vs DCIT (ITAT Mumbai)
Background and Penalty Under Section 270A
The appeal before the ITAT Mumbai arose from the appellate order dated 29.01.2026 concerning a penalty imposed under Section 270A of the Income-tax Act, 1961 for A.Y. 2017-18. The Assessing Officer found that the assessee had sold an immovable property for Rs. 60 lakh and that there was a difference between the PAN quoted in the return and the PAN appearing in the sale deed.
The assessee had originally filed a return on 13.10.2017 declaring total income of Rs. 7,17,540/- under PAN BZWPR1050F. The property transaction had been carried out using a secondary PAN, AGGPR7720N. Following a notice under Section 148, the assessee filed a return on 26.12.2024 declaring total income of Rs. 49,16,240/-, including capital gains, and paid the applicable taxes and interest.
The Assessing Officer accepted the returned income without making any addition but initiated penalty proceedings under Section 270A. A penalty of Rs. 4,32,466/- was subsequently imposed and confirmed by the CIT(A), who held that there was no voluntary disclosure of income.
Assessee’s Submissions
Before the Tribunal, the assessee contended that the second PAN had been quoted in the sale deed due to a bona fide mistake. She submitted that, after receiving the Section 148 notice, she disclosed the capital gains, paid the applicable tax and interest, and accepted the transaction details.
The assessee relied upon Section 270AA and submitted that the substantive conditions for immunity were satisfied because the tax and interest payable pursuant to the assessment had been paid and no appeal had been filed against the quantum assessment order.
It was also submitted that Form No. 68 had been filed belatedly on 04.04.2026 and that such delay was merely procedural. The assessee relied upon Ashutosh Dubey V/s ITO, Punam Kumar Bhati v/s ITO, New Dawath Traders v/s the ITO and Manoj Kumar Gangadharan in support of the contention concerning immunity and delayed filing of Form 68.
The assessee further argued that the penalty notice and order did not properly distinguish between under-reporting and misreporting. Reliance was placed on Schneider Electric South East Asia (HQ) Pte Ltd vs. ACIT (Delhi) concerning the requirement of specifying the relevant limb.
Tribunal’s Findings on Section 270AA Immunity
The Tribunal considered the factual matrix and found that the assessee had demonstrated fulfilment of the conditions required for immunity under Section 270AA. The Tribunal noted that the taxes along with interest had been paid with a delay of two days, while the application concerning immunity and Form No. 68 had been filed belatedly.
The Tribunal extracted Section 270AA, which provides for immunity from penalty under Section 270A where the prescribed conditions are fulfilled, including payment of tax and interest within the period specified in the demand notice and non-filing of an appeal against the assessment order.
Delayed Form 68 Treated as Procedural Lapse
Regarding the delayed filing of Form No. 68, the Tribunal observed that the assessee had already paid the due taxes almost within a month with an intention to avail the immunity. It held that the delayed filing of Form 68 could not be treated as an impediment to availing the immunity merely because of the procedural fault.
The Tribunal referred to coordinate bench decisions concerning similar delays and observed that technical or procedural rules should not take precedence over substantial justice. According to the Tribunal, the delayed filing constituted only a technical or venial breach and should not deprive the assessee of the substantive right to claim immunity after fulfilling the substantive conditions under Section 270AA(1)(a) and (b).
The Tribunal also noted that Form 68 had in fact been filed, albeit belatedly.
Section 270AA Order Set Aside and Matter Remanded
The Tribunal found that the impugned order did not disclose the basis for concluding that the assessee was not entitled to immunity or identify which condition under Section 270AA had not been fulfilled. It also found no indication of how the assessee’s contentions in the immunity application had been dealt with.
Accordingly, the Tribunal set aside the impugned order passed under Section 270AA and directed the Assessing Officer to revisit the application for grant of immunity in accordance with law and pass an appropriate order after providing the assessee an opportunity of hearing.
The appeal filed by the assessee was allowed for statistical purposes. The order was pronounced in the open court on 06.07.2026.
Cases Discussed
- Schneider Electric South East Asia (HQ) Pte Ltd vs. ACIT (Delhi)
- Ashutosh Dubey V/s ITO (ITAT), ITA No.2215/Pun/2025.
- Punam Kumar Bhati v/s ITO (ITAT), ITA No. 454/Jodh/2023.
- New Dawath Traders v/s the ITO (ITAT Chennai), ITA No. 2717/Chny/2024.
- Manoj Kumar Gangadharan (ITAT Indore), ITA No. 670 & 671/Ind/2024.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeal emanating from the appellate order dated 29.01.2026 is preferred by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as ”CIT(A)”] pertaining to a penalty order passed u/s. 270A of the Income-tax Act, 1961 [hereinafter referred to as ”Act”] dated 08.09.2025 for the Assessment Year [A.Y.] 2017-18.
2. The grounds of appeal are as under:
1. The order passed by the learned Commissioner of Income-tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), is contrary to the law, facts, and circumstances of the case and is based on a misinterpretation of the provisions of Section 270A of the Income Tax Act, 1961.
2. Erroneous Confirmation of Penalty u/s 270A: The learned CIT(A) erred in confirming the penalty of Rs. 4,32,466/-. The appellant contends that there was no intent to under-report or misreport income, as the non- disclosure in the original return was a bona fide mistake arising from the inadvertent use of a second, incorrect PAN (AGGPR7720N) during the property transaction.
3. Failure to Consider Section 270A(6)(a): The learned CIT(A) failed to appreciate that the appellant’s case falls under the immunity provided by Section 270A(6)(a). The appellant offered a bona fide explanation regarding the dual PAN situation and subsequently disclosed all material facts, including the capital gains, in the return filed in response to the notice under Section 148.
4. Voluntary Disclosure and Tax Payment: The lower authorities failed to consider that the appellant voluntarily accepted the transaction details, filed a revised computation, and paid the applicable taxes once the error regarding the incorrect PAN was brought to her notice. Such conduct demonstrates a lack of “mala fide” intent to evade tax.
5. Misinterpretation of “Under-reporting”: The learned CIT(A) erred in holding that disclosure made in response to a Section 148 notice cannot be considered a proactive disclosure. The appellant contends that the assessment was completed by accepting the returned income withoutfurther additions, indicating that the explanation for the initial non-disclosure was fundamentally valid.
6. Violation of Principles of Natural Justice: The penalty was confirmed without properly weighing the appellant’s submission that she was not fully aware of the legal implications of the dual PAN situation, which led to the procedural lapse rather than a substantive concealment of income.
3. In this case,the AO noticed that the assessee did not file return of income. It was found that she had sold an immovable property for Rs 60 lakh. In response to subsequent issued notice u/s 148 of the Act, she declared income of Rs 49,16,240/-.There was difference in the PAN quoted in the return and the sale deed. It was also found that she had filed original return on 13.10.2017 declaring income of Rs 7,17,540/-.On confrontation, she admitted the mistake having two PANs. The AO accepted the return without making any addition but initiated penalty proceedings u/s 270A of the Act and subsequently, penalty of Rs 4,32,466/- was imposed which was affirmed by the ld.CIT(A) holding that there was no voluntary disclosure of income.
4. Before us, the ld.AR has submitted that the assessee filed original return of income declaring a total income of Rs.7,17,540/- under PAN BZWPR1050F. During the relevant year, she sold an immovable property for Rs.60,00,000/-. Due to a bonafide mistake, a secondary PAN (AGGPR7720N) was quoted in the sale deed. Upon receipt of the notice u/s 148, the assessee filed a return on 26.12.2024, declaring the total income including capital gain of Rs. 49,16,240/- and paid the applicable taxes along with interest thereon. The chronology is stated as under:-
| Particulars | Date |
|---|---|
| Assessment order passed U/s 147 r.w.s 144 | 29/03/2025 |
| Tax along with Interest Paid on | 30/04/2025 |
| CIT(A) passed order on | 29/01/2026 |
| Form No.68 filed on | 04/04/2026 |
4.1 As the assessee had declared full income in response to notice u/s 148 and there being nil addition by the AO in the assessment order u/s 143(3)/144 r.w.s 147, the penalty u/s 270A should not have been levied at all. Reliance was placed on the case of Ashutosh Dubey V/s ITO (ITA No.2215/Pun/2025) wherein it was held that “there is no dispute regarding the explanation offered by the “A” for income offered towards capital gains derived from the transfer of property. Therefore, the A O ought not to have levied the penalty u/s 270A of the Act, for underreporting of income. The assessee had already discharged the tax liability on the total income of Rs.49,16,240/-. Levying a 50% penalty on a voluntary disclosure made during the assessment process is harsh and contrary to the spirit of the law. Only procedural aspect of submitting Form 68 remained, as the said Form was filed delayed on 04/04/2026.Thus, the delay in payment of taxes of two days and procedural aspect of filing Form 68 may be condoned and penalty be deleted as per immunity granted u/s 270AA of the Act, as no further appeal was filed by the assessee against the quantum order. It is stated that it was held in Punam Kumar Bhati v/s ITO(ITA No. 454/Jodh/2023):-“It is further submitted that the provisions of Income Tax Act, as provided in Sec.270AA provides for immunity from imposition of penalty for underreporting of income if assessee has deposited the demand created by the Ld. AO within 30 days from receipt of demand notice and intimated to him u/r 129 in Form no.68. The delay in filing the form is only a procedural lapse which should be allowed.= 4.2 It is further argued that the AO must specify whether the penalty was for “under-reporting or misreporting in the original assessment order. A vague notice can render the penalty invalid. Even in the Penalty order, the Ld. AO has levied penalty @ 50% of the amount of tax payable on under reporting of income and not on misreporting. In this connection, reliance is placed on the case of Schneider Electric South East Asia (HQ) PTE Ltd vs. ACIT (Delhi) wherein the hon’ble High Court held that a notice without a “specific limb” i.e., not specifying under-reporting vs. misreporting is unreasonable and violates the principles of natural justice. In view of the above facts, it was prayed to delete the impugned penalty of Rs.4,32,466/-imposed u/s 270A of the Act.
5. Before us, it was intimated that the assessee had filed an application u/s 270AA(2) of the Act as per acknowledgement date 04.04.2026 alongwith Form no.68, duly making payment of all taxes due and interest w.r.t. the return filed in response to the notice u/s 148 of the Act alongwith an undertaking that no appeal had been filed in respect of order u/s 147/143(3) of the Act.Copy of challan of Rs 16,41,220/- dated 30.04.2025 was also filed.The Ld. AR has also additionally submitted that in respect of the impugned assessment order, no first appeal was filed before the ld. CIT(A). Section 270A of the Act contemplates penalty for under reporting and mis-reporting of income whereas Section 270AA of the Act contemplates immunity from the imposition of penalty etc. and for which two conditions must be fulfilled by virtue of Section 270AA(1) which are (1) Assessee must accept the income and pay tax and interest thereon as per the assessment order within the period specified in notice of demand. (2) No appeal is filed against the assessment order. The ld. AR therefore pleaded that in the instant case both these two conditions are satisfied by the assessee, the requisite tax with interest has been paid as per the demand notice and no first appeal is filed before the CIT(A) against the quantum assessment orders. The ld. AR with regard to the requirement of filling of Form No.68 as per Section 270AA(2) contended that the said Form was filed belatedly. It was further argued that filing of the requisite form is procedural in nature and Section 270AA(2) of the Act should be liberally construed.
6. We have carefully considered all factual matrix of the case. We find that the claim regarding immunity u/s 270AA of the Act has not been properly appreciated by the lower authorities. Before us, the asessee has ably demonstrated that she has satisfied all the conditions required for grant of immunity. Such application appears to have been filed within the time specified in Section 270AA of the said Act, albeit with a delay of more than a year though the taxes alongwith the interest was paid with a delay of two days only. The same, therefore, ought to have been considered by the Assessing Officer in the right earnest while passing an order under Section 270AA of the Act of 1961.Section 270 AA of the said Act of 1961 is extracted here in below:
“270AA. (1) An assessee may make an application to the Assessing Officer to grant immunity from imposition of penalty under section 270A and initiation of proceedings under section 276C or section 276CC, if he fulfils the following conditions, namely:-
(a) the tax and interest payable as per the order of assessment or reassessment under sub-section (3) of section 143 or section 147, as the case may be, has been paid within the period specified in such notice of demand; and
(b) no appeal against the order referred to in clause
(a) has been filed.
(2) An application referred to in sub-section (1) shall be made within one month from the end of the month in which the order referred to in clause (a) of sub-section (1) has been received and shall be made in such form and verified in such manner as may be prescribed.
(3) The Assessing Officer shall, subject to fulfilment of the conditions specified in sub-section (1) and after the expiry of the period of filing the appeal as specified in clause (b) of sub-section (2) of section 249, grant immunity from imposition of penalty under section 270A and initiation of proceedings under section 276C or section 276CC, where the proceedings for penalty under section 270A has not been initiated under the circumstances referred to in sub-section (9) of the said section 270A.
(4) The Assessing Officer shall, within a period of one month from the end of the month in which the application under sub-section (1) is received, pass an order accepting or rejecting such application: Provided that no order rejecting the application shall be passed unless the assessee has been given an opportunity of being heard.
(5) The order made under sub-section (4) shall be final.
(6) No appeal under [section 246 or] section 246A or an application for revision under section 264 shall be admissible against the order of assessment or reassessment, referred to in clause (a) of sub-section (1), in a case where an order under sub-section (4) has been made accepting the application.]”
6.1 In so far as the delay in furnishing of Form no.68 is concerned, we find that the assessee had already paid the due taxes almost within a month with an intention to avail the immunity. Therefore, the delayed filing of Form 68 cannot be considered an impediment in availing such immunity on account of such procedural fault on her part. In this connection, we would like to refer to certain decisions of coordinate benches of ITAT on similar delay which was treated a technical and procedural lapse only for which immunity could not be disallowed as part of substantive justice. ITA No. 2717/Chny/2024 in New Dawath Traders v/s the ITO and ITAT C Bench, Chennai in ITA Manoj Kumar Gangadharan ITA No. 670 & 671 /Ind/2024. 6.2 It is a settled proposition of law that courts are meant to do substantial justice between the parties, and that technical rules or procedure should not be given precedence over doing substantial justice. In the given factual background, according to us, delayed filing of Form 68 is only a technical or venial breach which should not take away the substantive right to claim immunity from levy of penalty, which assessee got vested with on fulfillment of substantive conditions mandated in Clause (a) & (b) of sub-section (1) of section u/s.270AA of the Act. Moreover, the assessee had indeed filed Form 68 though belatedly.A meaningful reading thereof makes it clear that once an assessee satisfies the conditions mentioned in the earlier limbs of the said section, the AO would be bound to grant immunity to such assessee. The impugned penalty order could not have been passed without disclosing the basis for the conclusion as to why the assessee was not entitled to immunity and which of the conditions mentioned in Section 270AA of the said Act she failed to fulfil. There is no indication in the impugned order as to how her contention in the application for immunity been dealt with. For all the reasons aforesaid, the order impugned passed under Section 270AA of the Act, is set aside. The AO would revisit the application for grant of immunity, in accordance with law and pass appropriate order after affording an opportunity of hearing to the assessee.
7. In the result, appeal filed by assessee stands allowed for statistical purposes.
Order pronounced in the open court on 06/07/2026.
